Business Glossary

reporting methods, measurement systems, and disclosures used by a specific company. The accountant should evaluate the appropriateness of accounting policies employed by management. A description of the company's accounting policies should be presented in a separate section preceding the footnotes to the financial statements or as the first footnote. Disclosure of accounting policies should include accounting principles and methods of application that involve: (1) a selection from generally accepted alternatives; (2) those peculiar to the industry or field of endeavor; and (3) unusual or different applications of Generally Accepted Accounting Principles (GAAP) . Examples of disclosures are basis of consolidation , depreciation methods, and inventory pricing. , Disclosure of accounting policies assists financial readers in better interpreting a company's financial statements. Thus it results in fair presentation of the financial statements.