The Principle of Consistency States That

question 26

Multiple Choice

The principle of consistency states that:

• A) changes in accounting methods should occur from one fiscal period to the next.
• B) a company cannot change from one inventory valuation method to another.
• C) a company should switch from LIFO to FIFO every other period.
• D) by using the same inventory method from one fiscal period to another, the financial statements are more meaningful.

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Definitions:

Reservation Price

The maximum price a buyer is willing to pay for a good or service or the minimum price a seller is willing to accept.

Barbie's Preferences

A hypothetical example used to illustrate the concept of consumer preferences, particularly in the context of choices between different combinations of goods and services.

Dodge Owner's Demand

The specific desire or willingness of Dodge vehicle owners to purchase goods or services at various price levels.

Buick Owner's Demand

Refers to the specific requirements or preferences that individuals who own Buicks may have, which can influence market trends or product offerings.