PRUDENCE CONCEPT Definition

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PRUDENCE CONCEPT, otherwise known as conservatism, says that whenever there are alternative procedures or values, the accountant will choose the one that results in a lower profit, a lower asset value and a higher liability value.

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NZIAS is New Zealand International Accounting Standards.

IN-THE-MONEY OPTION is an expression used for any option series with intrinsic value, i.e., the options strike (exercise) price and market price of the underlying security are such that the holder can exercise the option at a profit. For example, if a call option with a strike price of 30 and the underlying stocks market price is currently 33, the call is in the money. A put option is considered in the money when the underlying stock is selling below the strike price. Premiums and other transaction costs are not considered in determining whether the option is in the money or out of the money. See OUT-OF-THE-MONEY OPTION.

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