Theory Base of Accounting — Account STD 11 Commerce — Question

Consistency Concept: According to the Consistency Assumption, accounting practices once selected and adopted, should be applied consistently year after year. The concept helps in better understanding of accounting information and makes it comparable with that of previous years. Consistency eliminates personal bias and helps in showing results that are comparable. The concept is particularly important when alternative accounting practices are equally acceptable. For example, two methods of charging depreciat on, Written Down Value Method and Straight Line Method, are equally acceptable. Under the assunption, method once chosen and applied should be applied consistently year after year to make the financial statements comparable.