Following the Consistency Principle, Once a Firm Adopts a Method

question 79

True/False

Following the consistency principle, once a firm adopts a method of inventory valuation, it should use that method consistently from one period to the next.

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Definitions:

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest.

Drawing Account

An account used by a sole proprietor to track money withdrawn from the business for personal use.

Total Assets

The sum of all current and non-current assets owned by a company, representing its overall value.

Cash Collection

The process of receiving and processing payments from customers, including cash, checks, and credit card payments.