Answer to Question #41442 in Finance for sugunah
The prudence concept can conflict with other fundamental concepts – like the accruals basis of accounting. Accruals recognize transactions that have not yet been completed – like a hire purchase sale or prepaid expenses. In such cases, one principle (in this case, accruals) should prevail.
Prudence, along with other fundamental principles, creates a sound platform for accounting. However, note that it is no excuse for an organisation to withhold revenue or create hidden reserves. After all, that conflicts with the principle of Fair Presentation.
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