Question

According to GAAP, the disclosure of accounting policies adopted by a reporting entity is important to financial statement readers in determining whether accounting policies are consistently applied from year to year. net income for the year. the value of obsolete items included in ending inventory. whether the working capital position is adequate for future operations.

Answer 1

A. whether accounting policies are consistently applied from year to year.

Step-by-step explanation:

Accounting policies need to be disclosed to ensure proper understanding of financial statements, it is necessary that all significant accounting policies adopted in the preparation and presentation of financial statements must be disclosed. Any change in an accounting policy that has a significant effect should be disclosed. Also to disclose significant accounting policies; Such disclosure helps users of financial statements (e.g., investors, creditors, vendors) to understand how particular accounting principles were used in preparing the company's financial statements.