Question

Discuss the accounting concept of consistency.

Answer 1

The accounting information provided by the financial statements is only useful to draw out conclusions regarding an enterprise only when it allows comparisons over a period of time as well as with the working of other enterprises. Once the company decides on a certain accounting policy it should not be frequently changed. Unless there is a statutory requirement or it allows a better representation of the accounts accounting policies should be consistent for long periods of time. This allows users to make inter-firm and inter-period comparisons.