prudence concept

prudence concept

the principle of commercial accounting that profits may not be anticipated in the books of a business; on the other hand, it is perfectly acceptable to make provision for losses as soon as they are foreseen. The term ‘prudence’, which is used to denote this style of accounting, developed during the 1970s; prior to that it had been known as ‘conservative’ accounting.
Collins Dictionary of Law © W.J. Stewart, 2006