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To achieve comparability of the financial statements of an enterprise, the same accounting policies should be followed from one period to another period due to ________ concept.
- a)Materiality
- b)Consistency
- c)Conservatism
- d)Going concern
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
To achieve comparability of the financial statements of an enterprise,...
Explanation:
Consistency is a fundamental accounting concept that ensures comparability of financial statements of an enterprise from one period to another. It requires that the same accounting policies and methods should be used for similar transactions and events in each accounting period.
Importance of Consistency concept:
Consistency concept is of utmost importance in accounting for the following reasons:
1. Comparability: Consistency of accounting policies and methods helps to ensure that financial statements of an enterprise are comparable from one period to another. This enables users of financial statements to make meaningful comparisons of an enterprise's performance and financial position over time.
2. Reliability: Consistent accounting policies and methods make financial statements more reliable by providing a basis for making valid and reliable comparisons.
3. Accuracy: Consistency helps to ensure the accuracy of financial statements since the same accounting policies and methods are used over time.
4. Transparency: Consistent accounting policies and methods promote transparency in financial reporting by providing a clear and consistent basis for presenting financial information.
Conclusion:
Consistency is a vital accounting concept that ensures comparability, reliability, accuracy and transparency of financial statements of an enterprise. It requires that the same accounting policies and methods should be followed from one period to another to enable meaningful comparisons of an enterprise's performance and financial position over time.
Consistency is a fundamental accounting concept that ensures comparability of financial statements of an enterprise from one period to another. It requires that the same accounting policies and methods should be used for similar transactions and events in each accounting period.
Importance of Consistency concept:
Consistency concept is of utmost importance in accounting for the following reasons:
1. Comparability: Consistency of accounting policies and methods helps to ensure that financial statements of an enterprise are comparable from one period to another. This enables users of financial statements to make meaningful comparisons of an enterprise's performance and financial position over time.
2. Reliability: Consistent accounting policies and methods make financial statements more reliable by providing a basis for making valid and reliable comparisons.
3. Accuracy: Consistency helps to ensure the accuracy of financial statements since the same accounting policies and methods are used over time.
4. Transparency: Consistent accounting policies and methods promote transparency in financial reporting by providing a clear and consistent basis for presenting financial information.
Conclusion:
Consistency is a vital accounting concept that ensures comparability, reliability, accuracy and transparency of financial statements of an enterprise. It requires that the same accounting policies and methods should be followed from one period to another to enable meaningful comparisons of an enterprise's performance and financial position over time.
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To achieve comparability of the financial statements of an enterprise,...
Consistency
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To achieve comparability of the financial statements of an enterprise, the same accounting policies should be followed from one period to another period due to ________ concept.a)Materialityb)Consistencyc)Conservatismd)Going concernCorrect answer is option 'B'. Can you explain this answer?
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