Consistency Concept

Consistency Concept

Consistency is one of the fundamental concepts for presentation of financial statement. Consistency is also required to be observed in selection & application of accounting policies .Some important Characteristics of consistency concept have been explained below;

1.    Presentation & Classification

Consistency is a concept related to continue presentation & classification of financial information. It means that organization will not change the presentation from one period to another.

2.    Continuity of Policy

Consistency concept is also associated with continue application of accounting policy from one period to another period. Management should not change accounting policy from one period to another. For example if plant is being depreciated under reducing method this year, then next year the same depreciation method is to be used.

3.    Comparability

Consistency concept is very important for comparability of financial statement. The information cannot be compared, until there is consistency of presentation and classification.

4.    Reasons for Change

Change in presentation is allowed, when there is requirement of regulator, international accounting standard. Change in presentation may also be due to more appropriate and logical presentation.

5.    Consistency of Policy & Presentation

Policy & presentation are two different concepts. Policy is more related to recording or processing of transaction, while presentation is related to presenting the information. In both cases consistency is required by international accounting standard. It means neither management would change policy or presentation without proper reasons.

Financial Statements Comparability Concept

Financial Statements Recognition Concept

Measurement Concept
Going Concern Concept