Question

John Brothers started a business of manufacturing bicycles at Bhopal on April 1, 2016. They have made an investment of Rs. 15,00,000 as capital. On the same date they purchased a machine for Rs. 2,00,000. The Auditors of the firm found that the accountant of John Traders keeps on changing the method of depreciation on Machine. Identify which accounting concept has not been followed by the accountant and explain that concept.

Answer 1

The accounting concept which has not been followed by the accountant is the consistency concept since he kept changing the method of depreciation on the machine.

The consistency principle is based on the fact that you continue to follow the same accounting method consistently when you adopt one for future accounting purposes.

Answer 2

Hey there,

The accounting method that has not been used by the accountant is called the consistency principle. This was evident by the fact that he kept on using different methods for the depreciation of the machine.

The consistency principle is based on the assumption that the principle of solving accounting problems must be the same and consistent. The problem can change but the accounting principles used for the future must remains the same.

I hope the answer is helpful.

Thanks