Final answer:
The principle of conservatism in financial accounting, which suggests recognizing potential expenses and liabilities immediately but revenues only when ensured, is true for not being well suited to measure taxable income. Taxable income needs to be measured based on actual transactions and tax law provisions, necessitating a more factual approach rather than a conservative one.
Step-by-step explanation:
The financial accounting principle of conservatism is a guideline that suggests that potential expenses and liabilities should be recognized immediately, but revenues only when they are ensured. This principle is not well suited for measuring taxable income because tax law requires a more precise calculation of income. Therefore, the statement that the financial accounting principle of conservatism is not well suited to the task of measuring taxable income is True.
In taxation, income must be calculated based on actual transactions and specific tax law provisions that do not always align with the conservatism principle. The conservatism principle is more suited for financial reporting purposes where organizations prepare financial statements for investors, creditors, or others external to the organization who may benefit from a conservative presentation of financial position.
When it comes to reporting taxable income, tax authorities expect a more factual and less conservative approach, which may involve recognizing all revenue that is earned and realizable during the tax period, as well as an exact accounting of all allowable deductions.