What principle emphasizes maintaining a conservative approach in accounting?

The Conservatism Principle emphasizes maintaining a conservative approach in accounting by guiding accountants to anticipate potential losses and liabilities but not potential gains or revenue. This principle ensures that financial statements present a cautious and realistic view of a company's financial position, avoiding the overestimation of income and assets. By adhering to the Conservatism Principle, businesses are encouraged to recognize expenses and liabilities promptly while delaying the recognition of revenues until they are realized. This approach helps users of financial statements, such as investors and creditors, to make more informed decisions by relying on prudent and cautious financial data.