Term: ACCOUNTING POLICY

A policy established by the board of directors for the allocation of transaction entries into the books of account. For public, listed companies, the accounting policies are normally set out in the first note to the financial accounts. They usually concern the method used to value stock and depreciate assets, the principles used in consolidating accounts, the method by which leases are charged, provisions made for deferred taxation, exchange rates used to value foreign currencies, what constitutes turnover (i.e when exactly revenue is recognised) and other items specific to the company. These days, most listed company’s financial statements are available from their website – which you can go to directly from that company’s share price graph in your charting package. You should always read through the notes to the accounts and specifically the company’s accounting policies to determine whether and how they may have changed from the previous year.

All information and data contained within the PDSnet Glossary terms is for informational and educational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet glossary terms is based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any glossary term for any reason.« Back to Glossary Index