TMI BlogDisclosure of Accounting PoliciesX X X X Extracts X X X X X X X X Extracts X X X X ..... d in the financial statements of an enterprise of its state of affairs and of the profit or loss can be significantly affected by the accounting policies followed in the preparation and presentation of the financial statements. The accounting policies followed vary from enterprise to enterprise. Disclosure of significant accounting policies followed is necessary if the view presented is to be properly appreciated. 3. The disclosure of some of the accounting policies followed in the preparation and presentation of the financial statements is required by law in some cases. 4. Accounting Standards require the disclosure of certain accounting policies, e.g., translation policies in respect of foreign currency items. 5. In recent years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stated because their acceptance and use are assumed. Disclosure is necessary if they are not followed. 10. The following have been generally accepted as fundamental accounting assumptions:- a. Going Concern The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations. b. Consistency It is assumed that accounting policies are consistent from one period to another. c. Accrual Revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprises. Areas in Which Differing Accounting Policies are Encountered 14. The following are examples of the areas in which different accounting policies may be adopted by different enterprises: (a) Methods of depreciation, depletion and amortisation (b) Treatment of expenditure during construction (c) Conversion or translation of foreign currency items (d) Valuation of inventories (e) Treatment of goodwill (f) Valuation of investments (g) Treatment of retirement benefits (h) Recognition of profit on long-term contracts (i) Valuation of fixed assets (j) Treatment of contingent liabilities. 15. The above list of examples is not intended to be exhaustive. Considerations in the Selection of Accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should form part of the financial statements. 20. It would be helpful to the reader of financial statements if they are all disclosed as such in one place instead of being scattered over several statements, schedules and notes. 21. Examples of matters in respect of which disclosure of accounting policies adopted will be required are contained in paragraph 14. This list of examples is not, however, intended to be exhaustive. 22. Any change in an accounting policy which has a material effect should be disclosed. The amount by which any item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact should be indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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