Consistency Principle

The Consistency Principle in accounting states that businesses should apply the same accounting methods and procedures over time. This ensures that financial statements are comparable across periods, allowing stakeholders to analyze trends and make informed decisions. Essentially, once a method is chosen, it should be used consistently unless there's a valid reason to change, which must then be disclosed. This reliability builds trust and clarity, helping users understand the company's financial performance without confusion or misinterpretation.