Scott Brothers, Inc. follows the qualitative characteristic of consistency. This means that
Answer
a. Scott applies the same accounting principles as its competitors.
b. Scott has elected certain accounting principles that can never be changed.
c. Scott applies the same accounting principles each period.
d. For expenses, Scott uses the same account names as used by its competitors.
c. Scott applies the same accounting principles each period.
To determine the answer to this question, we need to understand what the qualitative characteristic of consistency means in accounting.
Consistency is a fundamental accounting principle that states that a company should use the same accounting principles and methods for preparing its financial statements from one period to another, unless a change in those principles is justified. Consistency ensures that financial statements can be compared over time, allowing users to make meaningful evaluations and interpretations of a company's financial performance and position.
Now, let's evaluate the statements provided to determine which one aligns with the concept of consistency:
a. Scott applies the same accounting principles as its competitors.
This statement suggests that Scott uses the same accounting principles as its competitors, which can be a valid approach to consistency. However, it is not the only characteristic that defines consistency. There might be cases where Scott chooses different accounting principles while still maintaining consistency within itself.
b. Scott has elected certain accounting principles that can never be changed.
This statement does not accurately describe the concept of consistency. Consistency allows for changes in accounting principles when necessary, but it requires justification for those changes.
c. Scott applies the same accounting principles each period.
This statement aligns with the concept of consistency in accounting. Consistently applying the same accounting principles each period allows for comparability and meaningful analysis of financial statements.
d. For expenses, Scott uses the same account names as used by its competitors.
This statement addresses the consistency of account names rather than the consistency of accounting principles. While consistent account names can contribute to comparability, they do not entirely represent the concept of consistency in accounting.
Considering the explanations above, the correct answer to the question is:
c. Scott applies the same accounting principles each period.