The correct answer is: A. Conservation concept
The conservation concept is a fundamental principle of accounting that requires businesses to anticipate and record all potential losses, even if they have not yet occurred. This is done in order to provide a more accurate picture of the company’s financial condition.
The disclosure concept is a principle of accounting that requires businesses to disclose all material information to their shareholders. This includes information about the company’s financial condition, its operations, and its risks.
The materiality concept is a principle of accounting that states that only information that is significant to a company’s financial statements should be disclosed. This means that businesses do not have to disclose every piece of information about their operations, only the information that is important to investors.
The recovery concept is a principle of accounting that states that businesses should only record losses that are certain to occur. This means that businesses should not record potential losses that may or may not occur.
In the case of the question, the correct answer is A. Conservation concept. This is because the question states that all possible losses should be anticipated in advance. This is in accordance with the conservation concept, which requires businesses to anticipate and record all potential losses.