Question

The conservatism constraint prescribes that:

Answer 1

Option E

The conservatism constraint prescribes that: When multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used.

Explanation:

Conservatism constraint designates the aid of the less optimistic amount when more extra than unity assessment of the amount to be collected or repaid endures and these assessments are thereby uniformly likely.

The conservatism constraint suggests that, all annexes equal, we require to choose the postulate that is more moderate for assets and more leading for liabilities, these hypotheses forming the company resemble worse or most traditional. Conservatism constraint restricts the opportunity of economic statements being proffered that are emphasized, an overstatement that investors could perform on.