A Company Using the Same Accounting Principles from Year to Year

question 262

Multiple Choice

A company using the same accounting principles from year to year is an application of

• A) timelines.
• B) consistency.
• C) full disclosure.
• D) materiality.

---

Definitions:

Net Method

The net method is an accounting practice where purchase discounts are subtracted upfront from the cost of inventory, leading to the recording of purchases at their net cost if payment is made within a discount period.

Recording Purchases

The process of documenting transactions related to acquiring goods or services, essential for accurate financial reporting and inventory management.

Cash Discounts

These are deductions allowed by sellers on invoice amounts if the buyer pays promptly within a specified period, serving as an incentive for early payment.

Perpetual Inventory System

An inventory management method where records are continuously updated to reflect buys, sells, and stock levels in real-time.