Madden Company applies the consistency convention.What does this mean?
A)Madden Co.uses the same names for all its expenses as its competitors.
B)Madden Co.has selected certain accounting principles that can never be changed.
C)Madden Co.applies the same accounting principles each accounting period.
D)Madden Co.applies the same accounting principles as it competitors.

Question

Quizplus · Accepted Answer

The consistency convention means that a company consistently applies the same accounting principles or methods from one accounting period to the next, providing reliable and comparable financial statements for users. Option A and Option D refer to consistency with competitors, which is not the focus of the consistency convention. Option B is incorrect as accounting principles can be changed when necessary, but any changes need to be disclosed and explained in the financial statements.

Madden Company Applies the Consistency Convention