Sound Principles And Applied Research

With the development of our economic system reform,risks in accounting environments have enhanced rapidly. Especially the Asia Financial Crisis in 1997 has led accounting circles to think how to make accounting take a role in offsetting financial risk's affection. On the other side, as the day when China enter into the World Trade Organization(WTO) is impending, China must accelerate the coordi- nation of its own accounting standards with international accounting conventions. Under these circumstances, the Conservatism Principle has become a heat point in accounting area recently. Although our accounting standards have accepted the Conser- vatism Principle, there are still some disagreements on the concep- tion, status, and functions of the Conservatism Principle, and how to put it into effect. Such as the conception, there are three viewpoints: extreme conservatism, low conservatism, and modest conservatism. This thesis tries to analyze the essence of the Conservatism Principle, and gives some advice on how to use it in our country. The thesis consists of three parts. Part One relates to the theo- retical precondition, background and development of the Conserva- tism Principle. Part Two emphasizes the theoretical analysis of the Conservatism Principle. This part gives its conception firstly, and its relationship with asset measurement, revenue measurement and other accounting principles secondly, and also its affection in accounting operation. These discussions will help to disclose the veil of the Conservatism Principle and lay a fundamental for its using. Part Three introduces the using of the Conservatism Principle in our accounting standards and rules. Besides, this part also gives some detail advice on putting the Conservatism Principle into effect.