Financial information demonstrates consistency when
A) firms in the same industry use different accounting methods to account for the same type of transaction.
B) a company changes its estimate of the salvage value of a fixed asset.
C) a company fails to adjust its financial statements for changes in the value of the measuring unit.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

None of the choices accurately describe a situation where financial information demonstrates consistency. The consistency principle requires that accounting methods and practices remain the same from one period to the next unless a change is justified and disclosed. Therefore, using different accounting methods, changing estimates, or failing to adjust financial statements for changes in the measuring unit would not demonstrate consistency.

Financial Information Demonstrates Consistency When