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1.Conservatism
2.Accurate presentation
3.Tax Minimization
4.Income Smoothing
Accurate presentation relates to the percentage of completion method.
Try Relevance in terms of does the method closely approximate the activity or its driver.
CONSERVATISM. Percentage of completion method is used when.
* collection are assured
* The accounting system can; estimate profitability and measure progress towards completion.
The principle of conservatism states that you should always error on the most conservative side of any transaction i.e minimizing profits by recording uncertain losses or expenses and not recording uncertain or estimated gains.
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