Consistency Principle in Inventory Valuation

Steps:

• Identify the action: Trader uses the same inventory valuation method yearly.
• Recall accounting principles: Consistency requires uniform application of methods over periods for comparability.
• Match to options: This aligns with consistency, not other principles like duality or matching.
• Confirm: Uniform basis ensures reliable financial comparisons across years.

Why A is correct:

• Consistency principle mandates applying the same accounting policies, like inventory valuation, in each period to enable meaningful comparisons of financial statements (per GAAP/IFRS standards).

Why the others are wrong:

• B. Duality: Refers to double-entry bookkeeping, where every transaction affects two accounts; unrelated to valuation methods.
• C. Matching: Involves pairing expenses with related revenues in the same period; not about uniform valuation.
• D. Realisation: Recognizes revenue only when earned and realizable; does not address consistent inventory methods.

Final answer: A