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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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GAAP related to the disclosure of accounting policies:

  1. a. requires a description of every accounting policy followed by a reporting entity
  2. b. provides a specific listing of all types of accounting policies that must be disclosed
  3. c. requires disclosure of the format for the statement of cash flows
  4. d. requires a description of all significant accounting policies to be included as an integral part of the financial statements

To determine

Identify the option related to the GAAP disclosure of accounting policies.

Explanation

Additional balance sheet disclosures:

Additional balance sheet disclosure is one of the significant generally accepted accounting principles (GAAP). It states that the users of financial statements must be informed about the required (necessary) information which is essential for interpreting the statements because, it is not possible to report all the relevant information about the financial position of the company directly in the body of the financial statements. Therefore company can provide many “disclosures in the notes accompanying to its financial statements”.

Justification for the incorrect option a:

“GAAP related to the disclosure of accounting policies does not require a description of every accounting policy followed by a reporting entity. Therefore, it is an incorrect option.

Justification for the incorrect option b:

“GAAP related to the disclosure of accounting policies” does not provide specific listing of all types of accounting policies that must be disclosed...

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