A business uses the straight-line depreciation method each year without a valid reason for changing it. This practice reflects the principle of:
Correct answer: A. Consistency
- A. Consistency
- B. Prudence
- C. Materiality
- D. Realisation
Explanation
Consistency means applying accounting methods in the same way from period to period. This improves comparability, although a justified change may be made and disclosed when necessary.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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