Which principle suggests that financial statements should remain unchanged over time?

• A. Revenue recognition principle
• B. Going concern principle
• C. Consistency principle
• D. Full disclosure principle

Answer: (C)

The principle that suggests financial statements should remain unchanged over time is the consistency principle. This principle emphasizes the importance of using the same accounting methods and practices from one period to the next, ensuring that financial statements are comparable across different time periods. By adhering to this principle, businesses can provide stakeholders with more reliable and relevant information, allowing them to make informed decisions based on consistent data.

When accounting methods are consistent, it enhances the credibility of financial reporting because it minimizes the risk of distortions or misinterpretations that could arise from changes in accounting policies. The consistency principle is particularly important when analyzing trends or performance over time, as it facilitates a clearer understanding of a company's financial health.

While the other principles mentioned relate to important aspects of financial reporting, such as revenue recognition and the expectation that a company will continue to operate in the future (going concern), they do not specifically address the need for uniformity in accounting practices over time. The full disclosure principle requires that all relevant information be disclosed in the financial statements, but again, it does not focus on the consistency of accounting methods. Thus, the consistency principle is the key to ensuring that financial statements remain consistent and comparable over time.