While writing accounts or preparing financial statements, the same policies, procedures and methods should be followed every year. In this way, uniformity is to be maintained in accounting entries, books and various statements.
Examples :
- The method of stock valuation should be followed consistently and it should not be changed frequently, e.g., FIFO method, LIFO method, Weighted Average method.
- However, valuation of stock at cost or market price whichever is less every year does not violate the principle of consistency.
- The same method of depreciation and valuation for an asset should be followed consistently every year, e.g., Straight line method, Diminishing balance method, Depreciation fund method.
- There is no violation of principle of consistency, if fixed assets are valued at cost price.
- The change can be made in stock valuation method and depreciation method with appropriate reasoning. However, such changes should not be made frequently. Whenever change takes place, the same should be disclosed in the books of accounts.
