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Dictionary by pitch.dog
Accounting policy, GAAP & adjustments · Working

Prudence

Also called: conservatism

ELI5

Cautious judgement under uncertainty without deliberate bias, as understood in the applicable framework.

Used in conversation

“The number is useful only if everyone calculates prudence the same way.”

Pitch context

You will see “Prudence” in financial models, budgets, board packs and investor materials when the discussion reaches accounting policy, gaap & adjustments.

Why it matters: In accounting policy, gaap & adjustments, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

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Sources & evidence · 4

Direct term-level sources and supporting source families.