conservatism principle
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The conservatism principle arises because of concerns about management's incentives to overstate the firm's performance. Consider the statement: "We could get rid of conservatism and make accounting numbers more useful if we delegated financial reporting to independent auditors, rather than to corporate managers." Do you agree? Why or why not?
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The conservatism principle arises because of concerns about management's incentives to overstate the firm's performance. Consider the statement: "We could get rid of conservatism and make accounting numbers more useful if we delegated financial reporting to independent auditors, rather than to corporate managers." Do you agree? Why or why not?
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I do not agree with this statement because managers can provide the best judgement regarding the application of conservatism principle as they are the ones that know their business well and are fully aware of the exact status of the organization. It ...
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- BComm, University of Delhi
- Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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