 Hello. In this lecture, we're going to define conservatism constraint. According to fundamental accounting principles, while the 22nd edition, the definition of conservatism constraint is a principle that prescribes the less optimistic estimate when two estimates are about equally likely. So when we think about a conservatism constraint or a conservatism principle in the context of accounting, we're really looking to err on the side of the financial statements basically looking worse. In other words, we don't want to overstate assets and we don't want to understate liabilities because the overstatement of the assets will make the financial statements appear to be better than they actually are. And the understatement of liabilities will make the financial statements appear to look better than they actually are. And we would rather, in terms of a policy standpoint, understate the financial statements rather than deceive the readers by overstating the financial statements. Therefore, if we're looking at things like estimates, for example, an inventory estimate, and we're saying that the inventory is 15,000 or we could say that the lower price or the cost of the inventory is 12,000, and we're not sure what the value of the inventory is, all else being equal, we should value it at the 12,000 because that's the more conservative principle, meaning it's lowering the inventory, it's making the financial statements look worse, and we'd rather be underestimating the assets rather than overestimating the estimates, assets when we deal with estimates. That's the conservatism assumption, the conservatism principle in terms of accounting.