Accounting Conservatism
 |
Definition of 'Accounting Conservatism'A branch of accounting that requires a high degree of verification before making a legal claim to any profit. Accounting conservatism will recognize all probable losses as they are discovered and most expenditures as they are incurred. Revenue will be deferred until it is verified. Having strict revenue-recognition criteria is one of the most common forms of accounting conservatism. |
 |
Investopedia explains 'Accounting Conservatism'Generally speaking, there are many accounting practices that are deemed conservative. For example, overestimating an allowance for doubtful accounts can give a more accurate picture of recoverable receivables given a specific economic outlook. This overestimate may lower earnings for a certain period, but it may be more accurate than if the original amount were used. |
Related Definitions
Articles Of Interest
-
Detecting Accounting Manipulation
"One-time charges" and "investment gains" are two strategies companies can use to distort their numbers. -
An Introduction To Depreciation
Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line. -
Intangible Assets Provide Real Value To Stocks
Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value. -
Given a good bookkeeping system, would financial accounting be necessary?
Bookkeeping and financial accounting may seem like they are new creations, but variations have been around for millennia. The first record keeping systems, according to some, originated in about ... -
When should a company recognize revenues on its books?
When a company makes revenues from its operations, it must be recorded in the general ledger and then reported on the income statement every reporting period. According to generally accepted ... -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
Explaining Amortization In The Balance Sheet
Amortization is important to account for intangible assets. Read to find out more about amortization. -
Top 4 Most Competitive Financial Careers
If your goals include a big paycheck and working for a Wall Street firm, then you need to learn how to meet employers' expectations. -
A Day In The Life Of A Public Accountant
Here's an inside look at the workdays of two experienced CPAs, to give you an idea of what it might be like to pursue a career as a public accountant. -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up".
Free Annual Reports