This states that if a method is adopted, it must not be changed yearly to allow comparability of financial statements.
Question: This states that if a method is adopted, it must not be changed yearly to allow comparability of financial statements.
One of the principles of accounting is consistency. This means that once an accounting method is chosen by a business, it should be applied consistently in all subsequent periods. This allows the users of financial statements to compare the performance and financial position of the business over time. For example, if a business decides to use the straight-line method of depreciation for its fixed assets, it should not switch to the reducing balance method in the next year. Changing the accounting method would distort the results and make it difficult to assess the true profitability and financial health of the business.
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