The National Directory of Certified Public Accountants

Ask A CPA - Bookkeeping & Write-up

What Is The Conservatism Doctrine ?

The conservatism doctrine states that when exposure to uncertainty and risk is significant, an accounting entry should be made and accounting measurement and disclosure should take a cautious and prudent stance until evidence shows sufficient lessening of the uncertainty and risk. The allowance for bad debt account is an example of the realistic approach needed in the conservatism doctrine.

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