Comparability and consistency are fundamental principles in accounting that ensure financial information is useful, reliable, and meaningful over time and across entities.

Comparability allows users to evaluate financial information across different companies or periods. When businesses use the same accounting standards and present their financial statements similarly, investors, regulators, and stakeholders can compare performance, financial health, and trends more accurately. For example, comparing the revenue or net income of two companies only makes sense if both follow the same accounting rules and classifications.

Consistency, on the other hand, refers to the uniform application of accounting methods over time within a single company. By consistently applying the same accounting principles (e.g., depreciation method or inventory valuation), businesses ensure that financial data remains stable and reliable from one reporting period to the next. This enables stakeholders to identify real changes in performance, not just changes due to different accounting practices.

However, consistency does not mean inflexibility. If a company changes an accounting method for valid reasons (like adopting a more accurate standard), it must disclose the change and explain its impact in the financial statements.

Together, comparability and consistency enhance transparency and trust in financial reporting, helping users make informed economic decisions.