Question

which accounting principle/concept is based on the policy of playing safe?

​

Answer 1

Conservatism Principle

Explanation:

The accounting principle based on the policy of playing safe is Conservatism Principle.

"Do not anticipate a profit, but provide all possible losses." This principle is generally described using this phrase.

Prudence or Conservatism Principle states that anticipated expenses and losses should be accounted. It is a drawback for the firm as it can't able to create Secret Reserves, which they used to create for provisions, depreciation, etc.

In circumstances where there are two admissible solutions for reporting an item, the accountant choose the less favorable outcome. This allows him to predict future losses.

Answer 2

Answer:Solution: The concept of conservatism (also called 'prudence') provides guidance for recording transactions in the book of accounts and is based on the policy of playing safe.

Explanation:

Solution: The concept of conservatism (also called 'prudence') provides guidance for recording transactions in the book of accounts and is based on the policy of playing safe.