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AICPA Exam CPA-Financial Topic 2 Question 38 Discussion
Topic #: 2
Which of the following should be disclosed in a summary of significant accounting policies?
i. Management's intention to maintain or vary the dividend payout ratio.
ii. Criteria for determining which investments are treated as cash equivalents.
iii. Composition of the sales order backlog by segment.
Choice 'c' is correct. Il only.
The criteria for determining which investments are treated as 'cash equivalents' is a method of accounting policies that needs to be disclosed in the summary of significant accounting policies.
Choice 'a' is incorrect. Management's intention to maintain or vary the 'dividend payout ratio' is not an 'accounting policy.'
Choices 'b' and 'd' are incorrect. Composition of the sales order backlog by segment is not an 'accounting policy.'
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