Set Sail with Prudence, the Unsinkable Accounting Ship 🚢
Imagine you’re aboard a majestic accounting ship on the high seas of financial statements. There’s a trusty concept called Prudence at the helm, steering us clear of the treacherous icebergs of anticipated revenues and profits. According to our tried-and-true captain Prudence, we must not count our doubloons before they’re safely aboard! 💰
Why Prudence Roams These Seas ⚖️
The Prudence Concept insists that businesses maintain a realistic view of their activities. Anticipated revenues and profits are as good as Neptune’s promises (read as: not reliable) unless they’ve been turned into cold, hard cash or assets with a knowable cash value. However, Prudence is ever-vigilant, suggesting that we should account for any known expenses and losses, even if their amount is shrouded in foggy uncertainty.
The Chart of Lingo 📚
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