The purpose of this research paper is to teach the reader about financial statement disclosures. There are two main types of disclosure statements: mandatory and voluntary. I hope to show you the different types of disclosures and also the disclosure checklist. By the end of this research paper you should be able to clearly define what a financial statement disclosure is, what it consist of, and the purpose of one. I also hope to fully inform you of how disclosure statements may vary in the future.
Introduction: What is a financial statement disclosure?
According to eHow.com, “Financial statement disclosures are secondary information provided by companies to clarify or interpret certain published financial information. Disclosures are designed to assist outside reviewers of financial information for the purpose of making investments in the business. Management also uses disclosures to attest to the accuracy and validity of reported financial information as required by the Securities and Exchange Commissions (SEC).” So basically, disclosure notes are available to present all the information which cannot be on the income statements, balance sheet, statement of cash flows, and statement of changes in equity. These notes include such events as an introduction of the business outlining its legal status, its country of incorporation and the name of its parents if any and a statement about the company's areas of business and its operations, a summary of accounting policies related to revenue recognition, inventories, property, plant and equipment, financial instruments, etc., a detailed disclosure of different classes of financial instruments and their related risks, a detail of transactions with related parties, and a description of major events that occurred after the balance sheet date, etc. Mandatory Disclosures
There are a few occasions when GAAP requires disclosures to be provided. When changes in the financial statements are present,...
Please join StudyMode to read the full document