Moneyzine
Contents
/Investment Guides /Valuations and Accounting Policies

Valuations and Accounting Policies

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
November 29th, 2022
Advertiser Disclosure

Definition

The financial accounting term valuations and accounting policies refers to information that is supplemental to the company's financial statements. These explanations provide insights into the accounting policies in-place, as well as the methods used to value line items appearing in these reports.

Explanation

Valuations and accounting policies are one of several types of information that is supplementary to the items appearing on a company's balance sheet or income statement. Examples of these disclosures include:

  • Accounting Policies: specific policies and procedures used in the preparation of the company's financial statements.
  • Valuations: methods used when determining the current worth of a balance sheet asset, or the allocation of costs appearing on the income statement.

While accounting principles provide companies with guidelines and rules to use in the preparation of financial statements, the policies and methods used by accountants can be conservative or liberal. Providing this information allows the reader of a financial statement to understand the methods chosen, and draw conclusions as to the company's quality of earnings.

For example, Generally Accepted Accounting Principles provide several methods to account for depreciation and inventory estimates. The policies and valuation disclosures will indicate if the company has chosen straight line or declining balance depreciation, or the LIFO versus FIFO approach to valuing inventory.

Related Content

  • Biden Or Trump: Who Is Better For The Economy And Stocks?
    Yup. This is one of those articles. It's an election year, and here in the U.S., we get to decide which old dude who’s been alive long enough to remember when there were only 48 states in the U.S. will be the leader of the free world.
    March 19th, 2024
  • When it comes to strategic business planning, accounting is front and center, shaping the course of action. At least it should be.
    March 14th, 2024
  • DRIP Brokers: Best Brokers for Dividend Investing for November 2024
    Reinvesting dividends could mean compound growth for your portfolio. But reinvesting them manually can be a hassle. This is why you could benefit from a dividend reinvestment plan (DRIP).
    March 12th, 2024
  • How To Invest in Real Estate Without Becoming a Landlord
    We all know that in order to build wealth and prepare for retirement, investing is the key. However, it can be hard to figure out what to invest in and how to put your money to good use. One of the most talked about ways to build wealth is owning property and being a landlord to bring in passive income. But what if you don’t want to do that? You can still invest in real estate!
    March 6th, 2024
  • Investing In Nature: The Closest You'll Get To Your Money Growing On Trees
    ESG (Environmental, Social, and Governance) has become a polluted word for many traders and investors - but that doesn't mean it's going completely away. Nor does that mean you can't profit from nature or sustainable practices. But there are some opportunities in the regenerative ag, conservation, and green real estate spaces.
    February 29th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.