[amp_mcq option1=”Creating provision for bad debts” option2=”Creating provision for discount on creditors” option3=”Creating provision for discount on debtors” option4=”Creating provision for tax” correct=”option3″]<\/p>\n
The correct answer is C. Creating provision for discount on debtors.<\/p>\n
The convention of conservatism is a principle of accounting that states that assets and income should be conservatively measured, while liabilities and expenses should be conservatively estimated. This means that companies should err on the side of caution when reporting their financial results, and should not overstate their assets or income.<\/p>\n
Creating a provision for discount on debtors is not in line with the convention of conservatism because it would result in the company overstating its assets. A provision for discount on debtors is an amount that is set aside to cover the possibility that some of the company’s receivables will not be collected. This means that the company is essentially recognizing an expense that has not yet been incurred. This is not in line with the convention of conservatism, which states that expenses should be conservatively estimated.<\/p>\n
The other options are all in line with the convention of conservatism. Creating a provision for bad debts is a way of recognizing an expense that has already been incurred. Creating a provision for discount on creditors is a way of recognizing a liability that has already been incurred. Creating a provision for tax is a way of recognizing an expense that is expected to be incurred in the future.<\/p>\n
In conclusion, the correct answer is C. Creating provision for discount on debtors.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Creating provision for bad debts” option2=”Creating provision for discount on creditors” option3=”Creating provision for discount on debtors” option4=”Creating provision for tax” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-51816","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n