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The concept of prudence usually applies to the question of when you should recognise profit. A basic example would the fact that you record inventory in your accounts at the lower of cost and net realisable value, rather than at sale price, which (hopefully) contains a profit element. Instead the profit is only recognised when a legally enforceable sale has taken place.
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What is prudence concept?
From the Webster's Online Dictionary: The prudence concept states that profits and inventory should never be over stated an losses must not be under stated . the concept must be use when producing financial statements.... Next time you need an answer like this, just type in the words: Prudence Concept in your navigation bar and presto: Answer supplied.
What philosophical concept is demonstrated in this example?
[A+ Answer--> (Pragmatism)] a mechanic takes an automobile on a test drive after fixing the brakes to check if they are working properly..
What does exemplified mean?
It means "showed or illustrated by example".
Differences between concept construct and variables?
The main difference between concept/construct and variable is the details. Concept/construct is a basic idea. For example, it is male or female. Variable is more detailed. It is whether the female or male is straight, bi-sexual, or homo-sexual.
What is an example of the elitist theory?
An example of the elitist theory is the concept that power in society is concentrated in the hands of a select, privileged few who make decisions that benefit themselves at the expense of the majority. This theory suggests that a small elite group exercises control over governmental decisions and policies in ways that maintain their status and influence.
Advantages of prudence concept in financial accounting?
list 5 advantages of prudence concept
What is an example of prudence?
deprecation is the example of prudence
What concept is used in allowance for doubtful debts?
Prudence concept
Explain the importance of the Prudence concept?
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Prudence Concept in accounting?
preparation of account involve estimations, measurements and and valuations according to the conservatism or prudence concept it is a good practice to follow a procedure that tends to understate things.
Why concept of conservatism is called prudence?
Conservatism is often seen as prudence. People who are conservative do not waste things or use resources unwisely. This may make them seem as if they are prudish.
What are accrual concept and prudence concept?
According to accural concept, expenses incurred and revenue earned during the accounting period should be recorded in the same period of accounts regardless of the actual receipt of payment of cash. According to prudence concept revenue should be recognized only when it has been realized.Revenue is recognized in the period in which it is earned irrespective of the fact whether it is received or not during that period. for example: when a product delivered to a customer the company records a revenue even though the customer will pay after 30 days.
How can you use the word prudence in a sentence?
The word "prudence" is an antonym of the word "carelessness. " An example of the word "prudence" in a sentence is "The investigator demonstrated sufficient prudence while handling the case. "
What is an example of a sentence using the word prudence?
She showed great prudence by carefully considering all the options before making a decision.
Does accounting concepts conflict?
Accruals and prudenceThe accruals concept requires future income (e.g. in relation to credit sales) to be accrued. The prudence concept dictates that caution should be exercised, so that if there is doubt about the subsequent receipt, no accrual should be made.Consistency and prudenceIf circumstances change, prudence may conflict with the consistency concept, which requires the same treatment year after year.In both situations, prudence must prevail.
Example of prudence?
she uses prudence when listening to tv ads.
What is an example of a concept?
An example of a concept is called a prototype.
