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-BARSIC- [3]
2 years ago
15

During its first year in business, Comfy Home accounted for its inventory using the last in first out (LIFO) method. In the seco

nd year of business, Tenisa asks the accountant if the company can switch to first in first out (FIFO) because she recently learned FIFO will tend to increase both the value of assets and net income. The accountant tells Tenisa that US GAAP allows a company to choose its inventory valuation method as long as it doesn't change over time without a justifiable reason. This is an example of the principle of:________
a. Conservatism.
b. Relevance.
c. Consistency.
d. Reliability.
Business
1 answer:
Dmitry [639]2 years ago
5 0

Answer:

Consistency principle

Explanation:

Accounting principles are defined as the general rules of.axcpunting that businesses are expected to follow when reporting financial information.

Accounting principles include:

- Accrual principle

- Conservatism principle

- Consistency principle

- Cost principle

- Economic entity principle

- Full disclosure principle

- Going concern principle

- Matching principle

- Materiality principle

- Monetary unit principle

- Reliability principle

- Revenue recognition principle

- Time period principle

Consistency principle requires one the continue using an accounting method consistently for future accounting periods so that information can be easily comparable.

In the given scenario the accountant tells Tenisa that US GAAP allows a company to choose its inventory valuation method as long as it doesn't change over time without a justifiable reason.

This is an example of consistency principle

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Suppose the government imposes a price ceiling above the equilibrium price of a given good. d)Which of the following is the most
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c)No change will occur in the market.  

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2. Let’s work out a simple example where a person smooths her consumption over time. Gwen is a real estate agent, and she knows
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