Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 73: E2-8d

Answer

The principle of consistency requires that changes in any accounting principles be reported.

Work Step by Step

Not reporting the change from weighted average to first in first out (FIFO) is in direct violation of the consistency principle. Additionally, failing to report this change is misleading users as well as reducing the comparability of current statements to those of previous years.
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