The reporting entity's management is responsible for adopting and adhering to the highest quality accounting policies possible. APB 22 requires management, in discharging this responsibility, to adopt accounting principles and methods of applying them that are “the most appropriate in the circumstances to present fairly financial position, results of operations, and cash flows in accordance with generally accepted accounting principles.” APB 22 requires management to disclose, in the notes to the financial statements, a description of all significant accounting policies of the reporting entity. This requirement applies even in reporting situations where one or more of the basic financial statements has been omitted. In theory, if only one method of accounting for a type of transaction is acceptable under GAAP, it is not necessary to explicitly cite it in the accounting policies note, although many entities do stipulate all accounting policies affecting major financial statement captions.
A listing of accounting policies frequently disclosed by reporting entities follows (the listing is not intended to be all‐inclusive):
Advertising, direct response arrangements
Changes in accounting policies
Combined financial statements, principles of combination
Concentrations of credit risk, major customers and/or suppliers
Consolidated financial statements, principles of consolidation
Consolidated financial statements, ...