Conservative accounting uses accounting policies that tend to understate revenue and/or overstate expenses. On the other hand, aggressive accounting uses policies that tend to overstate revenue and/or understate expenses. A company using conservative accounting policies will have lower earnings in the current year, while a company using aggressive accounting policies will show better financial performance in the current year. Conservative accounting policies will tend toward better financial performance in the long run, while aggressive accounting policies tend to lead to a decline in financial performance over the long run.