Page 38 - PowerPoint Template
P. 38
Consistency Concept
Consistency means that a company uses the same
accounting principles and methods from year to year.
When financial information has been reported on a consistent
basis, the financial statements permit meaningful analysis of
trends within a company.
Example:
The company uses straight line method in depreciating the
fixed asset of the company. The company decides to change
to declining balances method.
Conclusion:
It does not follow the rules of the consistency because the
method should be used from year to year. Any changes
should be disclosed in the notes to the financial statements.
38
