Comparability of Financial Results

C

The consistency principle requires that an accounting procedure, once adopted by a company, remain in use from one period to the next unless users are informed of the change.

The accounting principle that is consistent with reporting financial results that can be compared with previous periods is the principle of consistency. Option C, consistency, is the correct answer.

Consistency is an important accounting principle that ensures the comparability of financial information over different accounting periods. It requires that a company uses the same accounting methods, principles, and assumptions when preparing its financial statements. By doing so, a company can provide users of financial statements with reliable and meaningful information that can be compared across different periods.

Consistency helps in analyzing and evaluating the financial performance and position of a company over time. It allows users to identify trends, changes, and patterns in financial data, facilitating meaningful comparisons and decision-making.

When a company applies the principle of consistency, it means that it consistently applies the same accounting policies and procedures for similar transactions and events. For example, if a company chooses to use the straight-line method for depreciating its assets, it should continue to use the same method in subsequent periods unless a change is justified and disclosed according to accounting standards.

Consistency does not mean that a company cannot change its accounting policies or methods. However, if a change is made, the company must disclose the nature of the change, the reasons for the change, and the effect of the change on the financial statements. This ensures transparency and allows users to understand the impact of the change on the comparability of financial information.

In summary, consistency is an accounting principle that promotes the uniformity and comparability of financial results over different periods. It helps users of financial statements make informed decisions by providing reliable and consistent information.