The consistency principle is violated when a firm uses straight-line depreciation one year and changes to declining balance depreciation the next year.

Question

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The consistency principle requires a firm to use the same accounting methods and procedures from one period to the next, unless there is a valid reason to change. Changing from straight-line depreciation to declining balance depreciation violates this principle, as it can lead to inconsistencies in financial reporting and make it difficult for stakeholders to compare financial statements over time.

The Consistency Principle Is Violated When a Firm Uses Straight-Line