Characteristics of Consistency Principle

Characteristics of Consistency Principle

In this article we would explain characteristics of consistency principle of accounting. These characteristics include fundamental requirement for comparability, consistency of presentation, consistency of policies, condition for changed presentation etc.

Important Characteristics of Consistency

Some important characteristics of consistency principle have been explained below.

1.   Fundamental Requirement

Consistency principle is a fundamental requirement for comparability of financial statements. Thus consistency plays an important role in developing understanding of the financial statements, because comparability is essential requirement for user understanding.

2.   Consistency of Presentation

Classification of item shall not change from period to period. This is important for comparison of information. The information are no more comparable, if presentation changes.

3.   Consistency of Policy

Consistency of policy is also important for ensuring comparability of financial statements. Changes in policy affect the comparability. For example, if the depreciation policy is changed from reducing to fixed installment methods, then deprecation would be no more comparable.

4.   Condition for Change Presentation.

There are two conditions under which presentation can be changed.

a.    Change is required International Financial reporting Standard.

b.    Change would improve the understanding of user.

List of Consistency principle Characteristics

Some important characteristics of consistency accounting principle are listed below.

a.    Consistency is fundamental requirement for comparison.

b.    Consistency includes both consistency of presentation & consistency in policy.

c.    Consistency may be changed in special circumstances.