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How do I prepare a summary of significant accounting policies?

As the financial statement preparer, you need to understand what accounting policies to disclose in your financial statements (typically in note 1). The detail should include the financial statement item impacted along with a brief description.

The description should be objective and should not reference any activity in the current period (i.e. the balance is $X). The visual below provides an example of how a summary of significant accounting policies can be drafted:

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    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...