Accounting Policies While Preparing Their Financial Statements

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Companies use accounting policies while preparing their financial statements. All financial statements are set to follow an international standard guideline. These policies are available to users of financial statements while making financial decisions in order to make sure that the proper decisions are being made. According to The Financial reporting and analysis article by Gibson, the full disclosure principle states that a company’s financial statements should include all the information needed in order for the reader to fully understand statements (Gibson, 2012). Disclosures not only provide extensive information to users but also monitor the preparation of financial statements to guarantee that it is free from any misleading policies that might have been used by management while preparing financial statements. Some of the requirements by the disclosure when preparing financial statements are reporting all transactions and trades that occurred during the period that the financial statements are covering are actually reflected on the financial statements. This includes any errors that might have caused any false calculations should also be reported on the financial statements. In addition to that, footnotes should be provided along with the financial statements to support and better explain financial reporting (Prentzas, 2012). The two common disclosures required and applied on financial reporting are fixed assets and notes payable. Fixed assets disclosure categorizes
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