Sections PS 2100 — PS 2700
SECTION PS 2100 disclosure of accounting policies
.01 This Section establishes disclosure standards on the accounting policies adopted by an entity in the preparation and presentation of its financial statements. Accounting policies are the specific accounting principles used by a reporting entity and the methods for applying those principles.
.02 There are a number of alternative accounting policies that may be applied to similar items. Because alternative accounting policies can produce significantly different results, a description of the accounting policies is necessary for the reader to interpret the financial statements and to become aware of differences when comparing them with the statements of similar entities. The description is an integral part of the financial statements since it is necessary for their interpretation. It should be concise or it may not be read, yet be clear to facilitate understanding and consistent interpretation. The description of accounting policies would not include amounts, analytical data or cross-references to specific items. Such information would be included in other notes to the financial statements.
.03 A clear and concise description of all significant accounting policies of a reporting entity should be included as an integral part of its financial statements. [SEPT. 1983]
.04 Appropriate accounting policies are those that result in fair disclosure of financial information. It is important that accounting policies be selected to meet this objective. There are a number of general considerations involved in this selection, including prudence, substance over form and materiality:
(a) Prudence requires that inevitable uncertainties surrounding many transactions be recognized and that the policy selected be directed toward an unbiased result that is neither overly