The accounting principle that requires the same depreciation method or inventory valuation method to be used over consecutive accounting periods is:
A)conservatism.
B)consistency.
C)reliability.
D)historical cost.

Question

Quizplus · Accepted Answer

The accounting principle that requires consistency in the use of a particular accounting method over consecutive accounting periods is consistency. This means that, for example, if a company uses the straight-line depreciation method in one year, it should continue to use that method in subsequent years rather than switching to a different method. Similarly, if a company values its inventory using the first-in, first-out (FIFO) method in one year, it should continue to use that method in subsequent years. Consistency enhances comparability between financial statements from different periods, making it easier for users to analyze trends and make informed decisions.

The Accounting Principle That Requires the Same Depreciation Method or Inventory