The consistent application of an inventory costing method is essential for
A) conservatism.
B) accuracy.
C) comparability.
D) efficiency.

Question

Quizplus · Accepted Answer

The consistent application of an inventory costing method is essential for comparability. If a company changes its inventory costing method frequently, it becomes difficult to compare the financial statements of different years. It is important to consistently apply one method to ensure that the financial statements provide accurate and comparable information to investors and creditors. While accuracy and efficiency are important, they are not the main reason why a company should consistently apply its inventory costing method. Conservatism is a principle of accounting, but it is not directly related to inventory costing method.

The Consistent Application of an Inventory Costing Method Is Essential