The Consistency Principle

question 49

Multiple Choice

The consistency principle

• A) Requires a company to use the same accounting methods period after period
• B) Requires a company to use one cost flow assumption exclusively
• C) Allows a company to change its cost flow assumption period after period in order to maximize net income
• D) Is also called the matching principle
• E) Allows a company to change its cost flow assumption period after period in order to minimize income taxes

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Definitions:

Expected Benefit Approaches

A method used in actuarial analysis or in benefits planning, projecting the future benefits to be received, often for purposes of pension plan funding or insurance.

Unverifiable

Pertaining to information or data that cannot be confirmed or corroborated through evidence or additional sources.

Unreliable

Lacking consistency, dependability, or accuracy in information, data, or result.

Cumulative Weighted Average Expenditures

The total cost of investments or expenditures over a period, weighted by the time each amount was invested or incurred, used in capital budgeting or to calculate interest during construction.