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Consistency is a concept used when applying accounting methods to a business, the business must continue to use that particular method. For an example if a company is charging depreciation using the straight line method, they must stick with the straight line method.
According to this concept,whatever accounting practices(whether logical or not) are selected for a given category of transactions,they should be followed from one accounting period to another to achieve compatibility
for example:if depreciation is charged according to a particular method it should be followed year after year for the purpose of comparison.
Omair shehzad
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Is depreciation an example of the matching concept?
Yes depreciation expense is also an example of matching concept as in this way part of fixed asset cost is apportioned to income statement and depreciation is not used in cash basis of accounting as there cash purchase is fully expensed in purchasing year.
What type of accounting disclosure is required if consistency concept is not applied?
In accounting the consistency concept means that when a method of accounting is adopted it must be used consistently in the future. If the policy for accounting is changed in any way the nature of the change, the effects the change has on items in the financial statement and the reason for making the change must be fully disclosed by the business. If the consistency concept is not applied then disclosure of changes are made at the discretion of the business.
Why depreciation is nasassary?
Depreciation is necessary because in this way the cost of asset is allocated to all those fiscal years in which that asset is used to generate revenue and if depreciation is not charged for all those years then it is against the matching concept as asset is used to generate revenue for more than one fiscal year but cost is allocated to one specific year.
How does depreciation reduce a taxes?
Depreciation is charged in profit and loss account as expense and it reduces the amount of net profit so in this way it also reduces the income tax payable.
What is the total-value principle as it applies to capital structure?
No way
Is depreciation an example of the matching concept?
Yes depreciation expense is also an example of matching concept as in this way part of fixed asset cost is apportioned to income statement and depreciation is not used in cash basis of accounting as there cash purchase is fully expensed in purchasing year.
How has Pink Floyd influenced music today?
1. Concept albums. 2. Psychologically unified music by way of thematic and motic consistency. 2. How a group, when stayed together, can continue to make music. 1. Concept albums. 2. Psychologically unified music by way of thematic and motivic consistency. 2. How a group, when stayed together, can continue to make music. 1. Concept albums. 2. Psychologically unified music by way of thematic and motivic consistency. 2. How a group, when stayed together, can continue to make music.
What type of accounting disclosure is required if consistency concept is not applied?
In accounting the consistency concept means that when a method of accounting is adopted it must be used consistently in the future. If the policy for accounting is changed in any way the nature of the change, the effects the change has on items in the financial statement and the reason for making the change must be fully disclosed by the business. If the consistency concept is not applied then disclosure of changes are made at the discretion of the business.
What is the correct way to account for depreciation in the books?
Which of the following represents the correct way to account for depreciation on the books
Why depreciation is nasassary?
Depreciation is necessary because in this way the cost of asset is allocated to all those fiscal years in which that asset is used to generate revenue and if depreciation is not charged for all those years then it is against the matching concept as asset is used to generate revenue for more than one fiscal year but cost is allocated to one specific year.
Accumulated depreciation and depreciation expense?
Using accumulated depreciation and depreciation expense is a way that businesses can realize the true value of assets. A piece of equipment, for example, is devalued every year by the process of amortizing the asset. This in turn is recorded as depreciation and depreciation expense.
Can depreciation charged at building?
Building is an asset for business and depreciation is only charged to assets of business so in this way depreciation is charged to building as well.
What type of accounting disclosure is required if consistency is not apply?
In accounting the consistency concept means that when a method of accounting is adopted it must be used consistently in the future. If the policy for accounting is changed in any way the nature of the change, the effects the change has on items in the financial statement and the reason for making the change must be fully disclosed by the business. If the consistency concept is not applied then disclosure of changes are made at the discretion of the business.
What are the differences between straight line depreciation and double declining depreciation methods?
The main difference between straight line depreciation and double declining depreciation methods is the way they allocate the cost of an asset over its useful life. Straight line depreciation spreads the cost evenly over the asset's life, while double declining depreciation front-loads the depreciation expense, resulting in higher depreciation in the early years and lower depreciation in later years.
What is the definition for vise versa?
What applies to something, applies the same way to the other. Or, what applies to one thing, applies the opposite way to another. Doubts see the context.
Why you use accumulated depreciation and not reduce depreciation from asset directly?
Basically the concept is to provide more detailed information and a method of checks and balances against the depreciation. The original acquisition cost of the asset is preserved this way and always appears until the asset is disposed. If you simply reduced the asset every year by the depreciation amount there would be less information for outsiders to understand why the asset keeps decreasing, or have the ability to distinguish whether you have new, low cost assets or a bunch of ancient assets which are almost completely depreciated.
What is the journal entry to depreciate an auto?
Journal Entry for an Auto Depreciation is as follows: [Debit] Depreciation Expense xxxx [Credit] Auto Asset xxxx Another way is as follows: 1 - [Debit] Depreciation Expense xxxx [Credit] Accum. Depreciation xxxx 2 - [Debit] Accum. Depreciation xxxx [Credit] Auto Asset xxxx
