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What Is The Importance Of The Topic Convention Of Consistency In Accounting Conventions?
This topic is very useful for accounting students and is important from the academic point of view. If you have decided to opt for Convention of Consistency in Accounting Conventions Assignment Help then there is no need to worry at all because you will get all the solutions in easy to understand format before the deadline.
The importance of this topic is discussed as follows-
- The convention of consistency actually states that the same accounting principles should be followed and applied in the preparation of financial statements year after year.
- This convention helps in achieving consistency and important conclusions can be analyzed if the organization is using the same principles for a number of years.
- The results of different time periods can be easily compared if the convention of consistency is followed.
- If any organization will alter the accounting procedures and principles from year to year basis then it won’t be possible to compare the financial statements and the company and other interested parties will not be able to know whether the company has actually progressed or not.
- It does not mean there is no scope for your improvement but it is important to disclose the important changes as footnotes to the financial statements.
- 3 types of consistency are there vertical (relates to the same period financial statements which are interrelated), horizontal (comparison of figures of one financial year with the other financial year of the same entity), third dimensional (comparison of financial statements of 2 organizations)
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