The consistency concept

The consistency concept basically means a company must administering the alike method in each accounting period, unless it has a valid or substantial reason to change. Principally, the readers of a firm’s financial statements can suppose that the alike rules and measurements were followed in all of the years being reported. If a diversity is made to a more preferred accounting method, the issues of the difference must be openly published. For instance, every year, firm A has been using the straight-line depreciation way of 20% years for its office equipment but abruptly for this present year, it started to depreciate using rate of 10%.

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