What does the Principle of Consistency require?

• A. Using the same accounting methods across periods
• B. Changing methods each period
• C. Ignoring all estimates
• D. Reporting only cash-based figures

Answer: (A)

Consistency in accounting policies means you apply the same methods from one period to the next. This makes financial statements comparable over time, so users can see genuine trends rather than changes that come from switching methods. That is why using the same accounting methods across periods best captures the intention of this principle. If a change in method is warranted, it must be justified and disclosed with its effects, and historical figures may need restatement in some cases. The other ideas don’t fit because changing methods every period destroys comparability; ignoring estimates omits important judgments; reporting only cash-based figures ignores accrual-based measurement and isn’t about consistency.