The Convention of Consistency Refers to Consistent Use of Accounting

question 107

Multiple Choice

The convention of consistency refers to consistent use of accounting principles

• A)among firms.
• B)from period to period.
• C)throughout the current accounting period.
• D)within industries.

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Definitions:

Carrying Amount

The net value of an asset or liability on a company's balance sheet, determined by subtracting its accumulated depreciation or amortization from its original cost.

Convertible

A security, often bonds or preferred shares, that can be converted into a specified number of another form, commonly shares of the issuing company's common stock.

Discount On Bonds Payable

The difference by which a bond's selling price is less than its face value, which effectively increases the interest yield for investors.

Additional Paid-In Capital

An amount paid by investors for shares that exceeds the par value of the shares; it reflects the excess amount investors are willing to pay above the nominal value.