When a company changes from straight-line to the declining balance method of accounting for depreciation,the financial statements lack
A)comparability.
B)consistency.
C)neutrality.
D)faithful representation.

Question

Quizplus · Accepted Answer

When a company changes from one method of accounting to another, it affects the consistency of financial statements. Consistency is an accounting principle that requires a company to use the same accounting methods and procedures from one accounting period to another. This principle ensures that financial statements are comparable over time and that users can evaluate changes in a company's financial performance using consistent accounting information. As such, when a company changes from straight-line to declining balance method, the financial statements lack consistency, and this can affect their comparability.

When a Company Changes from Straight-Line to the Declining Balance