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:

T-Bill

Short-term government debt security with a maturity of less than one year.

Simple Interest

A method of calculating interest where it is applied only to the principal amount, not on the accumulated interest.

Profit

The financial gain obtained when revenue from business activities exceeds the expenses, costs, and taxes involved in operating.

Simple Interest

An interest calculation method where the charge is based on the original principal amount, unaffected by the added interest.