Question:
The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally
accepted accounting principles.
Required:
1. Obtain the relevant authoritative literature on the disclosure of accounting policies using the FASB’s
Codification
Research System at the FASB website ( www.fasb.org ). Identify the topic number that provides
guidance on information contained in the notes to the financial statements.
2. What is the specific citation that requires a company to identify and describe in the notes to the
financial statements the accounting principles and methods used to prepare the financial statements?
3. Describe the disclosure requirements.
Answer:
Requirement 1
The topic number that provides guidance on information contained in the notes to the financial statements
is ASC Topic 235: “Notes to the Financial Statements.”
Requirement 2
The specific citation that describes the information that companies must disclose in the accounting
policies note is FASB ASC 235–10–50–3: “Notes to Financial Statements–Overall–Disclosure–What to
Disclose.”
Requirement 3
Disclosure of accounting policies should identify and describe the accounting principles the company
follows and the methods of applying those principles that materially affect the determination of financial
position, cash flows, or results of operations. In general, the disclosure encompasses important judgments
The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally
accepted accounting principles.
Required:
1. Obtain the relevant authoritative literature on the disclosure of accounting policies using the FASB’s
Codification
Research System at the FASB website ( www.fasb.org ). Identify the topic number that provides
guidance on information contained in the notes to the financial statements.
2. What is the specific citation that requires a company to identify and describe in the notes to the
financial statements the accounting principles and methods used to prepare the financial statements?
3. Describe the disclosure requirements.
Answer:
Requirement 1
The topic number that provides guidance on information contained in the notes to the financial statements
is ASC Topic 235: “Notes to the Financial Statements.”
Requirement 2
The specific citation that describes the information that companies must disclose in the accounting
policies note is FASB ASC 235–10–50–3: “Notes to Financial Statements–Overall–Disclosure–What to
Disclose.”
Requirement 3
Disclosure of accounting policies should identify and describe the accounting principles the company
follows and the methods of applying those principles that materially affect the determination of financial
position, cash flows, or results of operations. In general, the disclosure encompasses important judgments
