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.

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