What is consistency in financial reporting?
What is consistency in financial reporting?
The consistency principle states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods so that the results reported from period to period are comparable.
Why is consistency important in financial reporting?
Consistency concept is important because of the need for comparability, that is, it enables investors and other users of financial statements to easily and correctly compare the financial statements of a company.
What is a constraint in presenting financial information?
Constraints of accounting are the limitations or boundaries that are necessary for providing information with qualitative characteristics. To make the information useful, the basic accounting assumptions and principles discussed earlier, have to be modified and find their limitation.
Which basic assumption is illustrated when an entity reports financial results on an annual basis?
Cards
| Term T or F Companies consider only quantitative factors in determining whether an item is material. | Definition False |
|---|---|
| Term Which basic assumption is illustrated when a firm reports financial results on an annual basis? | Definition Periodicity assumption. |
How is consistency demonstrated in a financial statement?
Financial information demonstrates consistency when a. firms in the same industry use different accounting methods to account for the same type of transaction. b. a company changes its estimate of the salvage value of a fixed asset. c. a company fails to adjust its financial statements for changes in the value of the measuring unit. d.
How is information presented in a financial report?
Information presented by a company applies the same accounting treatment to similar events, from period to period. b. Information is timely. c. Information is classified, characterized, and presented clearly and concisely.
Which is an ingredient of relevance in financial reporting?
Information is timely. c. Information is classified, characterized, and presented clearly and concisely. d. Information is verifiable. Information presented by a company applies the same accounting treatment to similar events, from period to period. Which of the following is an ingredient of relevance?
What are the qualitative characteristics of accounting information?
Qualitative characteristics of accounting information d. Objective of financial reporting d. Objective of financial reporting a. decision usefulness. b. understandability. c. faithful representation. d. comparability. a. decision usefulness.