Consistency Principle in GAAP

Easy Financial Reporting Standards Gaap Framework

In accordance with the Generally Accepted Accounting Principles (GAAP), financial statements must provide a true and fair view of an entity's financial position. One of the key principles within GAAP is the concept of 'consistency'.

Which of the following statements best describes the principle of consistency in GAAP?

Entities should maintain the same accounting policies and procedures from period to period.

Entities must adjust their financial statements retrospectively to reflect new accounting standards.

Entities can change their accounting policies as long as they disclose the changes to the users of the financial statements.

Hint

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