- Convention of consistency means to use the same accounting methods for making financial statement in different years. When we use same accounting methods, it is easy for us to compare the financial statements of different years.
- For example there are many inventory valuation methods like LIFO, FIFO and average cost method. If you will use same method of inventory valuation of inventory, it will be very good for comparing the financial statement of two or more years. Closing stock affects both profit and loss account and balance sheet. If there will be consistence in its valuation, we can analyze our financial statement very with accuracy