What is the conservatism concept of accounting by prof. sanjay biyani
This is a part of lecture presented by Dr. Sanjay Biyani, Director of Biyani Girls College. The video is about Accounting Convention of Conservatism. Conservatism is the policy of ‘playing safe’. It takes into consideration all prospective losses but leaves all prospective profits. This accounting principle is given recognition in A.S. — 1. Following are the examples of the application of the convention of conservatism:
(a) Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount,
(b) Valuing the stock in trade at market price or cost price whichever is less.