CONSERVATISM PRINCIPLE Definition

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CONSERVATISM PRINCIPLE provides that accounting for a business should be fair and reasonable. Accountants are required in their work to make evaluations and estimates, to deliver opinions, and to select procedures. They should do so in a way that neither overstates nor understates the affairs of the business or the results of operation.

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LEMONS AND PLUMS, in finance, LEMON is an investment with a poor or negative rate of return; and, PLUM is an investment with a healthy rate of return.

MINORITY INTEREST is the interest or percentage ownership of a group of stockholders who, in total, own less than 50% of the shares in the corporation.

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