Welcome to our final principle! Consistency and comparability are the principles that put the accounting framework into action in real-world practice.

These principles ensure accounting information can be trusted and compared across companies and time periods.

Engagement Message

Name one reason investors need to compare financial information between companies.

Consistency means using the same accounting methods from period to period. If you depreciate equipment over 10 years this year, you should use 10 years next year too.

This creates reliable patterns that users can depend on when analyzing trends.

Engagement Message

How would constant changes in accounting methods affect trend analysis?

Comparability means different companies use similar methods for similar transactions. When Apple and Samsung both account for inventory, they should follow similar approaches.

This lets investors make meaningful comparisons between competitors in the same industry.

Engagement Message

Give one way investment decisions could suffer if each company used unique accounting methods.

Here's how they work together: consistency creates reliable trends within one company, while comparability enables meaningful analysis across companies.

Together, they build the foundation of trust that makes financial markets function effectively.

Engagement Message

Which matters more for analyzing one company over five years - consistency or comparability?

But here's the tension: business evolves! New technologies, business models, and economic realities sometimes require new accounting approaches.

Pure consistency might mean outdated methods, while constant change destroys reliability. Professional judgment must balance both needs.

Engagement Message

Provide an example of a legitimate reason a company might change its accounting method.