Application of the Principle of Prudence in Presenting the Accounting Information on Enterprises

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Pages: 97-103

Abstract:

The accounting system is a fundamental system in enterprises. It must be structured in such a way as to provide reliable information about the financial and property status, cash flows and the results of the overall activity of the enterprises. Individual consumers have different information needs and use specific aspects of accounting information. Based on this, they make relevant opera tional, strategic, and management decisions. When presenting accounting information, compliance with a number of principles is required, one of which is the principle of prudence. The aim of this paper is to reveal the role of the principle of prudence in accounting practice. Ap plication of the principle protects companies from cash flow crises and ensures a realistic view of financial health.

Keywords:

principle of prudence; requirements; accounting information; enterprises.

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