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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TRANSACTION FILE is a collection of transaction records. The data in transaction files is used to update the master files, which contain the data about the subjects of the organization (customers, employees, vendors, etc.). Transaction files also serve as audit trails and history for the organization.

TIME INTERVAL CONCEPT, in accounting, requires that financial statements be prepared at regular intervals, e.g. monthly, quarterly, annually.

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