This particular principle supports the application of conservative accounting that is an appropriate terms when dealing with the level of risk. It had been expressed to recognize revenue only during initiating sale to the customer. While agreeing upon the legal contract, in such a case, there might be a reasonable certainty in order to receive cash. There are distinct differences between the Canadian and US markets. It is widely believed that the Canadian historical experience is very different from that of the US, where most studies on stock market performance are based.
As a significant example, approximately 40 percent to 45 percent of the capitalized Toronto Stock Exchange was in financial services stocks and natural resources stocks over the period of sampling. In addition to this, within the stocks of commodity, if one makes consistent investment in the longer run without the effort of timing the market platform, the average returns will be turn out to be zero. Due to this, actively operating managers of Canada have been successful in beating the index more often, when considering the counterparts of USA.
A number of accountants have been evidently seen to record the losses that they anticipate by writing down and impairing the asset, instead of considering the anticipation of profits and leaving the latter in reorganization for realizing gains in the future. Most of the time, depreciation is forced to be higher or conservative because of low estimation regarding the life of assets that can be considered as useful. There might be a significant involvement of issues related to behaviour. Efficient marketers have admitted well enough that there is a lack of persistence as earnings grow . The price regarding growth stock can be identified as high when comparing current value perceived by future earnings as well as future dividends. Hence, it can be finally concluded that there is an involvement of more risk in growth stocks than value stocks.