What is included in the summary of significant accounting policies?
Financial statements will require important disclosures to be made as they are a key component of the financial statements because they provide critical assumptions and estimates.
The visual below provides some of the more common significant accounting policies, but that is not a complete list as Management needs to use discretion in determining what would be important to the readers of their financial statements.
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How a change in accounting principle is reflected in the financial statements?
Assuming the change in accounting principle is justified (i.e. makes sense), then the change should be reflected on a retrospective basis. This means that any prior periods that are included in the current year financial statements need to be restated to reflect the new accounting principle. For example, let’s say that the company used LIFO […]