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Accounting Framework - Convention of Conservation
Conservatism refers to the principle and practices that are established through way of tradition, reluctance to change from established principles and practices & inclination to play safe.
As per this convention accountant does not assess any gain or income until the similar has been realised or converted within money, but at the time of estimating expenses or losses the accountant goes beyond the doctrine of objectivity and makes a subjective estimate of possibility. It is for the purpose, in accounting; proper provisions are always made against current profit for future losses and contingencies.
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