NCERT · Class 11 · Accountancy · Theory Base of AccountingWhich accounting principle states that 'Anticipate no profit and provide for all possible losses'?
Step-by-Step Solution
The Principle of Conservatism (or Prudence) dictates that accountants should not anticipate profits but should provide for all possible losses to ensure the financial position is not overstated.
Detailed Options Breakdown
Option : Full Disclosure Principle
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Theory Base of Accounting.
Option 1: Materiality Principle
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Theory Base of Accounting.
Option 2: Conservatism Principle (Correct Answer)
Correct choice. Refer to the step-by-step verified solution guidelines above for details.
Option 3: Consistency Principle
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Theory Base of Accounting.
💡 Study Guide: This question tests core syllabus concepts from Theory Base of Accounting. For formulas, key summaries, and mock exam reference guides, read the full Theory Base of Accounting Revision Notes.