what accounting principle would changing methods every year violate?
The accounting principle that changing methods every year would violate is the consistency principle (or the principle of consistency). This principle states that once an accounting method or principle is adopted, it should be consistently applied from one accounting period to another, unless a justified reason for change exists.
To understand this principle, let's break down the steps to determine the answer further:
1. Identify the accounting method: Changing methods refers to using different accounting practices or principles to record transactions or prepare financial statements.
2. Define the consistency principle: The consistency principle requires businesses to use the same accounting methods consistently, from one period to the next, to ensure comparability and reliability of financial information.
3. Consider the effect of changing methods: Changing methods frequently can lead to inconsistencies in the financial information reported. It makes it difficult for stakeholders, such as investors and creditors, to analyze and compare financial statements accurately and make informed decisions.
Therefore, changing methods every year violates the consistency principle, as it fails to maintain uniformity and comparability in financial reporting.