The effect of the prudence concept is that…?
Select ONE answer:
- net profit is the difference between revenues and expenses rather than the difference between receipts and payments.
- losses should be provided for as soon as they are foreseen and profit should not be recorded prematurely.
- similar items should be treated in a consistent way from one accounting period to the next.
- None of the above.
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple choice question is suitable for Accounting KS5 classes.
The answer is 2
- is the accruals concept.
- Correct
- is the consistency concept.
- Not correct
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