Abstract

Alekhya, a young entrepreneur who had successfully run a cotton bags manufacturing unit for five years, decided to expand the business by making an additional investment in the plant and machinery of the company. She approached the bank which had given her a loan to start the business for an additional loan and submitted the necessary documents. However, the bank rejected the loan request stating that the valuation of the plant and machinery looked inconsistent. The present case study provides scope for a discussion on the concept of consistency in the accounting process and how it facilitates the decision-making process by ensuring the reliability of accounting information.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The consistency concept in accounting
• The importance of consistency in the decision making process
• How the consistency concept ensures reliability of accounting information

Keywords

Accounting; Accounting principles; Accounting Concepts; Consistency Concept;Depreciation; Going concern concept; Profit and loss account; balance sheet