CONSISTENT definition in the Cambridge English Dictionary
Consistency does allow a company to make a change to a more preferred accounting method. However, the change and its effects must be clearly disclosed for the benefit of the readers of the financial statements. In accounting, consistency requires that a company’s financial statements follow the same accounting principles, methods, practices and procedures from one accounting period to the next. This allows the readers of the financial statements to make meaningful comparisons between years. These examples are programmatically compiled from various online sources to illustrate current usage of the word ‘consistent.’ Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Let’s assume that a U.S. corporation uses the FIFO cost flow assumption for valuing its inventory and determining its cost of goods sold.
- Due to the increasing cost of its materials, it concludes that LIFO will better indicate the company’s true profit.
- This allows the readers of the financial statements to make meaningful comparisons between years.
- Let’s assume that a U.S. corporation uses the FIFO cost flow assumption for valuing its inventory and determining its cost of goods sold.
Due to the increasing cost of its materials, it concludes that LIFO will better indicate the company’s true profit. In the year of the change from FIFO to LIFO (and in years when comparisons are presented), the company must disclose the break in consistency. For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, consistency meaning university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com. These examples are programmatically compiled from various online sources to illustrate current usage of the word ‘consistency.’ Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors.
What is the consistency principle?
These are words often used in combination with consistency. The Financial Accounting Standards Board refers to consistency as one of the characteristics or qualities that makes accounting information useful.