Question

provision for bad and doubtful debts are created in anticipation of actual bad debts on the basis of:

1. convention of material
2. convention of consistency
3. convention of conservatism
4. convention of full-disclosure​

Answer 1

The provision for bad and doubtful debts are created in anticipation of actual bad debts on the basis of convention of conservatism.

In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to "play safe".

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