Dear sir,
I have just started studying SBR and have come across the conceptual framework for financial reporting in the FR textbook where it says if there is no framework, it could lead to inconsistencies in the accounting standards, particularly in the case of matching and prudence concept.
Could you explain how these 2 concepts are an example?
Thanks.
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Conceptual Framework
7y ago#1Hi,
Prudence is essentially recognising the liability when it is probable and the asset when it is virtually certain. In being prudent then we might not be matching the right amounts in the right period, and recognising too much of a liability too early.
Thanks
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