This Master Thesis deals with the accounting concepts of conservatism and neutrality and their discussed internal contradiction. It identifies the introduced accounting concepts and investigates their benefits and limitations to accounting and financial reporting under certain situations or/and under certain estimations.First of all, it examines the role of both concepts in the Conceptual Framework of the IASB. It then focuses on the objective of information usefulness, as this can be seen as the main triggering source of the discussed inconsistency between the two concepts from the IASBs point of view. By means of a binary information system the usefulness of good or bad information is assessed and examined to see to what extent conservatism or neutrality affects the information content.It further presents the significant recurring arguments on the extensive debate surrounding conservatism and neutrality in the IFRS. It will focus on each argument, and examine the conservative or neutral perspective step by step.These arguments propose that it is essential to consider different forms of conservatism as they have different consequences. As the IASB emphasises investors protection, it is provocative to argue that investors may be more interested in losses than in profits. Thus, relevant arguments have been selected and the reaction of bias i.e. conservatism to them debated.Managers prepare the information used by externals and the thesis examines investigations that managers possess discretion in accounting choices. Existing information asymmetries and managerial incentives may ask for accounting principles as a mean to mitigate those asymmetries. Finally, as the standard setters basically arose from a financial crisis and financial collapses are still a current topic, the focus lies on conservatism vs. neutrality in a financial crisis and the fair value approach to it.