Question

Explain the principle of industry practice.

Answer 1

Different accounting principles are 'generally' followed and it is not binding to follow some particular accounting principle. The special features of an industry may require departure from the accounting guidelines. There may be a long-standing accounting practice in an industry. Then all units in that industry must follow that practice. This will make the comparison of results of these units easier. Such a practice will result in the uniformity of procedures and will be consistent with the accounting principles.