Apply consistency, matching, prudence and realisation
Apply the remaining accounting concepts to revenue, estimates, material items and policy changes.
Cambridge IGCSE Accounting 0452 / (9–1) 0985, 2027–2029 Version 1. These lessons follow the 2027–2029 syllabus only; the separate 2026 syllabus update is not yet mapped. Written practice is self-checked, not an official Cambridge grade. Full timed-paper practice and human subject-teacher review remain pending.
Before you begin
- No previous accounting study is assumed. Keep the business, transaction and accounting period in view, and distinguish a resource, a claim and a performance result.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
A business has earned a fee but has not received cash. Which concept supports recording it now?
What you will learn
- Explain consistency and matching/accruals
- Apply prudence, materiality and realisation
- Use concepts to justify a treatment without overstating certainty
Match income and expenses and recognise realised transactions
Matching/accruals recognises income earned and expenses incurred in the period, not only cash received or paid. Realisation recognises revenue when the transaction has been earned under the stated conditions, rather than when an order is merely expected.
Consistency means applying accounting policies consistently so results can be compared. A justified policy change may be made when appropriate, with its effect explained; consistency does not mean keeping a poor policy forever.
Use judgement for relevance and estimates
Materiality treats an item according to whether its size or nature could influence decisions. Prudence requires care when making uncertain estimates, avoiding overstatement of assets or income and understatement of liabilities or expenses.
Apply these concepts to the evidence and question. Prudence is not permission to create excessive hidden reserves, and materiality does not excuse intentional misstatement.
Pause and explain
A customer places an order for delivery next month and has not received goods or services yet. Should this normally be current-period realised revenue?
Worked example
At year-end, a business has earned $2,000 of service income not yet received, estimates a doubtful debt, changes its inventory policy, and receives an order for work next month. Explain which concepts guide each item.
Show the worked solution
- Recognise the earned $2,000 with an accrued-income asset under matching/accruals; cash has not yet arrived.
- Use prudence when estimating the doubtful-debt allowance, based on evidence rather than an unsupported amount.
- Explain a justified inventory-policy change for consistency and comparability; do not recognise next month's order as current revenue before it is earned.
Answer Accrue earned service income; estimate doubtful debts cautiously; explain any justified policy change; and do not realise revenue from an unfulfilled future order.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A utility bill for the current year arrives next month. Explain the concept and year-end treatment.
Give me a hint
Use the period when the service was consumed, not invoice timing.
Compare my reasoning
- The utility service relates to the current period.
- Record the expense now and an accrued liability for the unpaid bill.
- This applies matching/accruals.
Recognise the current-period utility expense and accrued liability under matching/accruals, even though the invoice arrives later.
Look for these in your work
- Expense period correct
- Liability stated
- Concept applied
A business uses one depreciation method this year and considers another next year because the asset-use pattern changed. Explain consistency and what should be disclosed or considered.
Give me a hint
Consistency supports comparison but does not require an unsuitable method to continue unchanged.
Compare my reasoning
- Assess whether the new method better reflects the changed use pattern and is justified.
- Apply the decision consistently to the relevant assets and periods.
- Explain the reason and effect where the accounting information or question requires it.
A justified change may be made if the new method better reflects asset use; consistency supports comparability, so explain the reason and relevant effect.
Look for these in your work
- Change justified by evidence
- Consistency understood
- Effect considered
A business estimates a $900 irrecoverable-debt allowance even though evidence supports $300. Explain why prudence does not justify the larger unsupported figure.
Give me a hint
Prudence is careful estimation from evidence, not deliberate understatement.
Compare my reasoning
- An allowance should reflect the evidence about expected collection risk.
- $900 would overstate the expected loss if only $300 is supported.
- The unsupported amount would distort profit and receivables rather than apply a faithful cautious estimate.
Prudence supports a reasonable evidence-based estimate, not an excessive unsupported allowance that deliberately understates profit and receivables.
Look for these in your work
- Evidence basis stated
- Distortion identified
- Concept bounded
Common mistakes
- Using cash timing instead of matching income and expense
- Treating a future order as realised revenue
- Using prudence to deliberately understate profit
- Assuming consistency forbids a justified policy change
What can you explain now?
Which concept recognises expenses in the period to which they relate?
Compare with the explanation
Matching or accruals
The concept aligns period expenses with related income and activity.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
How does prudence differ from deliberately understating profit?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.