Prudence: Difference between revisions
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imported>Doug Williamson (Update to reflect the replacement of the 'prudence' concept with 'neutrality' in international financial reporting standards.) |
imported>Doug Williamson (Add quote.) |
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The accounting practice of recognising income and assets only when they are reasonably certain, whilst recognising expenses and liabilities whenever they are probable. | The accounting practice of recognising income and assets only when they are reasonably certain, whilst recognising expenses and liabilities whenever they are probable. | ||
Prudence is not an excuse for accounting manipulations such as 'big bath' provisioning. | |||
:<span style="color:#4B0082">'''''Neither overstate, nor understate'''''</span> | |||
:Neutrality is supported by the exercise of prudence. | |||
:Prudence is the exercise of caution when making judgements under conditions of uncertainty. | |||
:Prudence does not allow for overstatement or understatement of assets, liabilities, income or expenses. | |||
:''IFRS Conceptual Framework project summary, March 2018'' | |||
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* [[Accounting concepts]] | * [[Accounting concepts]] | ||
* [[Accruals concept]] | * [[Accruals concept]] | ||
* [[Big bath]] | |||
* [[Conceptual framework]] | |||
* [[Consistency]] | * [[Consistency]] | ||
* [[Disaggregation]] | * [[Disaggregation]] | ||
* [[IFRS]] | |||
* [[Neutrality]] | |||
[[Category:Accounting,_tax_and_regulation]] | [[Category:Accounting,_tax_and_regulation]] | ||
Revision as of 11:19, 17 February 2019
Accounting.
The accounting practice of recognising income and assets only when they are reasonably certain, whilst recognising expenses and liabilities whenever they are probable.
Prudence is not an excuse for accounting manipulations such as 'big bath' provisioning.
- Neither overstate, nor understate
- Neutrality is supported by the exercise of prudence.
- Prudence is the exercise of caution when making judgements under conditions of uncertainty.
- Prudence does not allow for overstatement or understatement of assets, liabilities, income or expenses.
- IFRS Conceptual Framework project summary, March 2018
