Question
Provisions for bad not doubtful debts is created in anticipation of actual bad debts on the basis of _______________. (A) Business entity concept (B) Conservatism concept (C) Going concern concept (D) Full disclosure concept
Answer
4.3
(199 Votes)
Ambrose
Master · Tutor for 5 years
Answer
answer: b Conservative conventions mean prudent conventions, or policies that are safe.This principle requires that, in the case of uncertainty and doubt, commercial transactions should be recorded in the way of not reporting more profits and assets, but many losses and liabilities.Here are some examples:.1. Closed market shares are valued at cost price or net realizable value, whichever is lower.2. The joint life insurance policy shall only be displayed according to the ratio of the surrender amount to the paid amount.3. Provision for bad debts caused by bad debts.4. Provide for pending legal proceedings against the company in favour of which an award may be made.