Question

There are 2 branches of a company Batra Shoes Ltd. One is in Delhi & the other is in Mumbai. The accountant of the branch in Delhi uses LIFO method for valuation of inventory of shoes while the accountant of the branch in Mumbai uses FIFO method for valuation of inventory. When the accounts of the 2 branches are consolidated, this fact is ignored. Is it correct? If Not, which accounting convention is violated by this.

• A. Yes, it is correct
• B. No, Going Concern Convention
• C. No, Money Measurement Concept
• D. No, Consistency Convention

Answer 1

The correct option is D No, Consistency Convention

Consistency with reference to application of accounting procedures means accounting methods & procedures shall be followed on a uniform basis throughout all the branches in a particular organization so that books of account represent a true & fair view.