The correct answer is C. Convention of conservatism.
The convention of conservatism is a principle of accounting that requires businesses to be cautious in their financial reporting. This means that businesses should err on the side of caution when estimating future events, and should not overstate their assets or profits.
Making the provision for bad and doubtful debts in anticipation of actual bad debts is an example of the convention of conservatism. This is because the business is recognizing the potential loss of these debts even though they may not have actually occurred yet. This is done to be cautious and to avoid overstating the company’s assets.
The other options are not correct. The convention of disclosure is a principle of accounting that requires businesses to disclose all relevant information about their financial performance. This information should be presented in a way that is understandable to users of the financial statements. The convention of consistency is a principle of accounting that requires businesses to use the same accounting methods from period to period. This makes it easier for users of the financial statements to compare the company’s performance over time.