Under generally accepted accounting principles, a company can choose a cost flow assumption for valuing cost of goods sold that can result in different income reporting. However, it can't frequently change the cost flow assumption adopted in order to measure the highest income possible because of the:

Question

Quizplus · Accepted Answer

The consistency principle requires a company to use the same accounting methods and procedures from period to period, unless there is a valid reason for a change. This principle promotes comparability and consistency in financial reporting, and prevents a company from frequently changing its cost flow assumption in order to manipulate income reporting.

Under Generally Accepted Accounting Principles, a Company Can Choose a Cost