The consistency concept requires like items to be treated in the same manner both within one set of accounts and from one period to another. Such a concept could easily prevent progress if applied too rigidly for, if a better accounting treatment than the existing method was discovered, it could never be applied because it would be inconsistent with the past! Obviously, it will be necessary to depart from this concept on occasions but then it is necessary to give warning that such departure has occurred and to show clearly what the effect has been.

Example:

If a company is using straight line method of depreciation then it should use the same method in every period. If the company wants to change the depreciation method (say declining balance method) then it should disclose this change and the effects of this change on accumulated depreciation in the financial statements.