The Principle of Consistency States That

question 94

Multiple Choice

The principle of consistency states that:

• A)Companies are prohibited from ever changing their accounting methods.
• B)Every company in the same industry must use the same accounting principle.
• C)There must be a consistent blend to the accounting principles.
• D)If changes in accounting principles are made,the reasons for the change and the effects on the company's net income must be disclosed.

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Definitions:

Supply-side

An economic theory that emphasizes the role of supply in fostering economic growth by reducing taxes and decreasing regulation, with the intent of increasing production.

Monetarism

A school of economics that places paramount importance on money as the key determinant of the level of prices, income, and employment.

Velocity of Circulation

The rate at which money is exchanged in an economy, often used to represent the activity level in the financial system.

Expected Profit Rate

The anticipated return on an investment, taking into account both the probability of gains and the risk of losses.