Article 7
The amount of any item shown shall be determined on a prudent basis, and in particular—
only surpluses realised at the balance sheet date shall be included in the income and expenditure account; and
all liabilities and deficits which have arisen or are likely to arise in respect of the period of account to which the accounts relate shall be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the managing body.
In paragraph (1), “prudent” means not anticipating revenue and surplus, but recognising them only when realised in the form of cash (or of other assets of which the ultimate cash realisation can be assessed with reasonable certainty) and making provision for all known expenses and deficits whether the amount of these is known with certainty or is a best estimate in the light of the information available.