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Companies have two inventory issues that must be disclosed in the notes: the basis upon which the company states inventory (lower of cost or market) and the method in use to determine cost. GAAP allows three different cost flow assumptions: specific identification; weighted average; and first in, first out (FIFO).

Unless it is impracticable to determine the effects of the error, an entity corrects material prior period errors retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred.

Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!

Footnotes are superscript numbers (1) placed within the body of text. They can be used for two things: As a form of citation in certain citation styles. As a provider of additional information.

Presentation of a Prior Period Adjustment Finally, when you record a prior period adjustment, disclose the effect of the correction on each financial statement line item and any affected per-share amounts, as well as the cumulative effect on the change in retained earnings.

The information given in a footnote includes the author, the title, the place of publication, the publisher, the date of publication and the page or pages on which the quotation or information is found.

Pick up any financial report and you'll always find references to the footnotes of the financial statements. The footnotes describe in detail the practices and reporting policies of the company's accounting methods and disclose additional information that can't be shown in the statements themselves.

The current liabilities can also be analyzed with the help of the current ratio and the quick ratio. It is calculated by adding total cash and equivalents, accounts receivable, and the marketable investments of the company, then dividing it by its total current liabilities.

Footnotes to the financial statements refer to additional information that helps explain how a company arrived at its financial statement figures.They also help to explain any irregularities or perceived inconsistencies in year to year account methodologies.

Accounting disclosure notes are included in the footnotes to an entity's financial statements. These notes reveal certain important facts about an entity's finances that are not shown elsewhere in the financial statements.