The Consistency Principle Requires a Company to Use the Same

question 67

True/False

The consistency principle requires a company to use the same accounting methods period after period,so that financial statements are comparable across periods.

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Definitions:

Assets

Resources owned or controlled by an entity with expected future economic benefits.

Sales

The total revenue earned from the sale of goods or services related to a company's primary operations.

Common Stock

Common stock is a type of security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits through dividends.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.