Consistency in accounting:The sole purpose of the consistency principle, or consistency concept, is to ensure that transactions or events are recorded in the same way, from one accounting year to the next. When talking about different accounting methods, this can include anything from cash vs accrual accounting and using LIFO vs FIFO methods. Financial Analysis can be of two types, i. e. Horizontal Analysis and Vertical AnalysisBASIS FOR COMPARISONHORIZONTAL ANALYSISVERTICAL ANALYSISMeaningHorizontal analysis is the comparative evaluation of the financial statement for two or more periods, to calculate the absolute and relative variances for every line of item. Vertical analysis is a proportional evaluation of the financial statement wherein each item on the statement is expressed as a percentage of the total, in the respective section. UseIt represents the growth or decline of an item. It helps in forecasting and determining the relative proportion of an item to the common item in the financial statement. Aims atAscertaining the trend and changes in an item over time. It aims at ascertaining the proportion of items to the common item of the single accounting year. ExpressesAn item from the past financial statement is restated to a percentage of the amount from the base year. Each item of the financial statement is denoted as a percentage of another item. ComparisonHelpful in intra-firm comparisonHelpful in both intra-firm comparison and inter-firm comparisonTherefore, Horizontal consistency calls for financial statements for a number of years to be reviewed and analyzed. Internal consistency requires that 'any individual standard adopted should be consistent with the existing system of standards' External consistency means having the same aesthetic design or performance across multiple systems. External consistency extends the benefits of internal consistency across multiple independent systems.