The accounting convention that state that; stock should be value that the lower of cost and net realized value is _______ convention?

A. marching
B. consistency
C. realization
D. prudency

Correct Answer:

Option D – prudency

Explanation

Prudence Concept or Conservatism principle is a key accounting principle which makes sure that assets and income are not overstated and provision is made for all known expenses and losses whether the amount is known for certain or just an estimation i.e expenses and liabilities are not understated in the books of account