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Definition

Consistency principle

Consistency principle dictates that a company uses the same accounting principles and methods from to year.

Consistent application enhances the comparability of financial statements over successive time periods. Whatever cost flow method a company chooses, it should use that method consistently from one accounting period to another. In contrast, using the FIFO method one year and the LIFO method the next year would make it difficult to compare the net incomes of the two years.

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