Consistency Principle
The accounting requirement to use the same accounting methods from period to period, ensuring financial statements can be meaningfully compared over time.
Consistency Principle
The accounting principle requiring companies to apply the same accounting methods and procedures from period to period, ensuring financial statements are comparable over time.
For instance, if a manufacturing company uses straight-line depreciation for its equipment in one year, the consistency principle requires it to continue using this method in subsequent years unless there is a justified reason to change.
Consistency allows users to identify genuine business trends by eliminating variations caused by accounting method changes. When a company must change accounting methods, it must disclose the nature, justification, and effect of the change, helping users understand its impact on reported results.