Why is it important to adopt a consistent basis for the preparation of financial statements? - Explanation

Why is it important to adopt a consistent basis for the preparation of financial statements? Explain 

  It is important to adopt a consistent basis for the preparation of financial statements as it helps in comparison of financial statements. According to the consistency principle, accounting practices once chosen should be continued over a period of time (i.e. after years) and should not be changed very frequently. These help in better understanding of the financial statements and thus make comparison easier.
  For example, if a firm is following the FIFO method for recording stocks, and switches to the weighted average method, this year's results cannot be compared with previous years' results.

  However, this does not mean that the firm cannot change its accounting policies. A better approach, if available, leading to better presentation and better understanding of the financial results, may be adopted by the firm but this should be clearly stated through footnotes to make the users of the financial statements aware of the changes.

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NCERT Class 11 Theory Basic of Accounting-Accountancy