With respect to the valuation of inventory and measurement of the cost of goods sold,the principle of consistency means that the same method should be applied:
A)In successive accounting periods.
B)By all companies in a given industry.
C)To all products in the inventory.
D)In financial statements and income tax returns.

Question

Quizplus · Accepted Answer

The principle of consistency states that the same accounting method should be used from one accounting period to the next in order to ensure that financial statements are comparable over time. This applies to the valuation of inventory and measurement of the cost of goods sold, as well as other accounting practices. Choice B is incorrect because consistency is not necessarily required across all companies in a given industry, though it can be a useful benchmark. Choice C is incorrect because different products in the inventory may require different accounting methods. Choice D is incorrect because the principle of consistency applies primarily to financial statements, not income tax returns.

With Respect to the Valuation of Inventory and Measurement of the Cost