The convention of consistency means, same accounting principles should be used for preparing financial statements year after year. Meaningful conclusion can be drawn from financial statements of enterprise when there is comparison between them over a period of time. It is possible only when accounting policies and practices followed by enterprise are uniform and consistent.
Fig.3.1 Types of consistency
It is to facilitate comparative analysis of financial statements.
It ensures uniformity in charging depreciation on fixed assets and valuation of closing stock.