15.4 - Important Accounting Conventions
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Practice Questions
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Explain the conservatism principle in accounting.
💡 Hint: Think about how this principle protects stakeholders.
What does consistency in accounting ensure?
💡 Hint: Consider why changes in methods could be problematic.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does the conservatism principle require companies to do?
💡 Hint: Think about how businesses protect themselves.
True or False: The consistency principle allows companies to change their accounting methods as needed without any consequences.
💡 Hint: Consider the impacts of changing methods on comparability.
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Challenge Problems
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A company has been using straight-line depreciation for its assets. They are considering switching to declining balance depreciation. What steps should they take to comply with the consistency principle?
💡 Hint: Think about how changes require transparency and communication.
When assessing whether to report an expense, how can a company determine if the expense is material?
💡 Hint: Consider the potential decision-making impact of the number on stakeholders.
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