The accounting concept of consistency prohibits any change in accounting principle previously employed.

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Prepare for the Coach CFE Exam. Study using flashcards and multiple-choice questions, each with hints and explanations. Get ready for your assessment!

Multiple Choice

The accounting concept of consistency prohibits any change in accounting principle previously employed.

Explanation:
Consistency means applying the same accounting principles from period to period so users can compare financial statements over time. But it does not forbid changing principles. A change is allowed if there’s a justified reason to better reflect the economic reality, and such changes must be disclosed and applied retrospectively (restating prior periods) to maintain comparability. Differences in estimates behave differently and usually aren’t restated. So the statement is false.

Consistency means applying the same accounting principles from period to period so users can compare financial statements over time. But it does not forbid changing principles. A change is allowed if there’s a justified reason to better reflect the economic reality, and such changes must be disclosed and applied retrospectively (restating prior periods) to maintain comparability. Differences in estimates behave differently and usually aren’t restated. So the statement is false.

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