AICPA Exam CPA-Financial Topic 3 Question 110 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 110
Topic #: 3

[All CPA-Financial Questions]

Which of the following is correct concerning financial statement disclosure of accounting policies?

ADisclosures should be limited to principles and methods peculiar to the industry in which the company operates.

BDisclosure of accounting policies is an integral part of the financial statements.

CThe format and location of accounting policy disclosures are fixed by generally accepted accounting principles.

DDisclosures should duplicate details disclosed elsewhere in the financial statements.

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. Disclosure of accounting policies (and all other disclosure also) is an integral part of the financial statements.

Choice 'a' is incorrect. For disclosure of accounting policies, disclosure should not be limited to principles and methods peculiar to the industry in which the company operates. All material accounting policies should be disclosed.

Choice 'c' is incorrect. For disclosure of accounting policies, the format and location of accounting policies are not fixed by GAAP. Accounting policy disclosures are normally Note 1, but that is a (reasonable and very general) practice and not a 'rule.' It does make sense to disclose the 'why' before the 'what.'

Choice 'd' is incorrect. Disclosure of accounting policies should not duplicate details disclosed elsewhere in the financial statements.

Interim Financial Reporting

by Tori at Apr 05, 2025, 01:27 AM

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Brianne

12 days ago

I bet the correct answer is 'All of the above' because accountants love to make things as complicated as possible.

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Luis

13 days ago

Accounting policies? More like accounting party! As long as the numbers add up, who cares about the fine print, right?

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Jaclyn

18 days ago

D is just silly. Why would you want to duplicate information already covered in the statements?

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Elliott

19 days ago

I'm going with C on this one. The format and location of these disclosures are typically standardized.

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Tina

1 months ago

I agree, B is the best choice here. Disclosure of accounting policies provides crucial context for interpreting the numbers.

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Renay

16 days ago

User 2: I agree, disclosure of accounting policies is important.

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Annabelle

22 days ago

User 1: I think B is the correct choice.

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Elke

1 months ago

Option B definitely seems the most accurate. Accounting policy disclosures are essential for understanding a company's financial statements.

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Katheryn

1 months ago

I believe C) The format and location of accounting policy disclosures are fixed by generally accepted accounting principles is also important for consistency and comparability.

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Lili

1 months ago

I agree with Kimbery, because disclosing accounting policies helps users understand how the financial statements were prepared.

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Kimbery

2 months ago

I think B) Disclosure of accounting policies is an integral part of the financial statements.

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