1RQ - Horngren'S Financial And Managerial Accounting

Question

Which principle states that businesses should use the same accounting methods and procedures from period to period?

Step-by-Step Solution

Answer

The principle of consistency governs to use of the same accounting methods and procedures from time to time.

Accounting Principle

The accounting principle is the set of assumptions and conceptions that must be adhered to while preparing accounting records. These principles are the guidelines for the accounting process and govern the standards and rules.

Principle of Consistency

The principle of consistency is based on the notion that the business must use the same accounting method and assumptions from one period to another. This is because it helps the investors and lenders to compare the financial statements of the same company for different periods or the financial statements of different companies for the same period.