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Accounting Objective Question: Which statement accurately reflects the impact of the principle of Prudence on financial reporting and the treatment of uncertainties and risks in

Accounting Objective Question:
Which statement accurately reflects the impact of the principle of Prudence on financial reporting and the treatment of uncertainties and risks in accounting practices?
A) Prudence encourages understating assets and overstating liabilities to present a conservative financial position.
B) Prudence advocates for recognizing gains when realized and losses when probable, ensuring a realistic depiction of financial performance.
C) Prudence disregards uncertainties and risks, leading to a biased representation of financial statements.
D) Prudence promotes aggressive accounting practices, resulting in inflated revenue figures and understated expenses.

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