posted by Avatar on May 17
The principle of prudence states that accounting information is direct to the point without any beautification factor and that the numbers are on an as is basis meaning it is consistent and not embellished with non-fact. The principle of Prudence states that accounting practices and information should detail the value of assets as well as monetary funds. The information should be done in a way that is not for short term use only but for the long run but it is allowed that asset and other fixed materials be accounted for at their depreciated value. There is a need for the accounting of all assets (buildings, machinery and other assets) that are owned by the company for it is part of the overall value of a firm that should be included in financial reports submitted to requesting authorities.