A company decides to change its method of depreciation from the straight-line method to the reducing balance method without disclosing this change in the financial statements. Which principle has been violated?

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KollegeApply · Accepted Answer

Consistency Principle Explanation: The Consistency Principle states that accounting procedures and methods (such as depreciation) must be consistent from one fiscal year to the next in order to allow for meaningful year-over-year comparisons. If a corporation changes its depreciation method, it is legally required to report the type, causes, and financial impact of the change in its financial statements; therefore, an undisclosed move is a clear violation.

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