Question

Give the advantages of following consistency concept.

or

Why should a business follow a principle of consistency?

Answer 1

A business should follow this principle because of the many advantages associated with it.

Advantages of the following consistency concept are:

(i) It helps the financial statements to be more understandable and comparable.

(ii) It is important when alternative accounting practices are available.

(iii) It eliminates personal bias and helps in achieving results that are comparable.