2023 · Q27
The value of long-term investment in shares is subject to wide fluctuations. A provision created against fluctuation in value of investments is based on the convention of
General Accounting Principles, Auditing and InsuranceFinal accounts
- Aconservatism
- Bfull disclosure
- Cmateriality
- Dconsistency
Explanation
The convention of conservatism (prudence) requires anticipating losses but not gains, which is why a provision is created against an expected fall in investment value. Full disclosure (B) concerns revealing material facts, and materiality (C) concerns significance thresholds. Hence A.