Prudence principle requires that:
AProfits be overstated
BAssets/revenue not be overstated; liabilities/expenses not be understatedCORRECT
CAll items be ignored
DCash basis is used
CIBNFinancial Accounting
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Why the answer is B, and why the others tempt you.
Prudence is caution under uncertainty: don't overstate gains/assets; don't understate losses/liabilities.
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