Explain why the characteristics of comparability and consistency ...

[Jkov05]

Explain why the characteristics of comparability and consistency are important in financial reporting?
 
  What will be an ideal response?

Question 2

How can you prevent prior period adjustment errors?
 a. Do not enter a closing date.
   b. Setup a password to restrict access to prior periods.
   c. Do nothing. QuickBooks will not allow prior period adjustments.
   d. None of the above.

[bookworm410]

Answer to Question 1

The characteristics of comparability and consistency require companies to use the same accounting methods and choices from one period to another. This allows users to compare financial information of an entity to other entities as well as comparing financial information of that entity to itself from one time period to another. Changes in accounting methods and choices can distort trends that are useful when trying to predict the future of a firm.

Answer to Question 2

b