6
Question
Which convention implies that the accounting practices should remain same from one year to another year?
Which convention implies that the accounting practices should remain same from one year to another year?
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Solution
The correct option is B Consistency
The accounting information provided by the financial statements would be
useful in drawing conclusions regarding the working of an enterprise only
when it allows comparisons over a period of time as well as with the working
of other enterprises. Thus, both inter-firm and inter-period comparisons are
required to be made. This can be possible only when accounting policies and
practices followed by enterprises are uniform and are consistent over the
period of time.
The accounting information provided by the financial statements would be useful in drawing conclusions regarding the working of an enterprise only when it allows comparisons over a period of time as well as with the working of other enterprises.
Thus, both inter-firm and inter-period comparisons are
required to be made. This can be possible only when accounting policies and
practices followed by enterprises are uniform and are consistent over the
period of time.
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