Question

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity. This guidance comes from

(Points : 4)
a. the cost constraint.
b. prudence or conservatism.
c. the industry practices constraint.
d. the full disclosure principle.

Answer 1

The guidance that accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity comes from prudence or conservatism.

Step-by-step explanation:

The guidance that accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity comes from prudence or conservatism. This approach emphasizes a cautious and conservative approach to financial reporting, preferring to understate rather than overstate financial results. It is used to ensure that financial statements provide a fair and accurate representation of a company's financial position.