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Which statement about the prudence concept is correct?

  1. A Losses are anticipated but gains are not recognised until realised
  2. B All estimates should be optimistic
  3. C Assets should be overstated
  4. D Income should be recognised early
Answer

Losses are anticipated but gains are not recognised until realised

Prudence is why inventory is valued at the lower of cost and net realisable value.

All CA MCQs

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