Impact of Consistency on Reporting Quality

Easy Financial Reporting Standards Reporting Quality

In the context of financial reporting, the quality of reported information is critical for users of financial statements. Higher reporting quality implies that the financial statements provide a fair and accurate representation of a company's financial position and performance. One of the key characteristics that enhance reporting quality is consistency in financial reporting practices. Which of the following options best describes the impact of consistency on reporting quality?

Consistency allows for comparability across different periods, increasing the reliability of financial information.

Consistency in financial reporting can lead to a reduction in the overall profitability of a company.

Consistency in reporting is not relevant if the underlying economic conditions change significantly.

Hint

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