Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 41

Following are a number of the key terms and concepts introduced in the chapter, along with a list of corresponding definitions. Match the appropriate letter for the key term or concept to each definition provided (items 1–8). Note that not all key terms and concepts will be used.

a. Explanatory notes to financial statements	h. Prospectus
b. Five-year summary	i. Purchase accounting
c. Significant accounting policies	j. Corporate governance
d. Stock option plan	k. Contingencies and commitments
e. Accounting change	l. Business segment
f. Business combination	m. Management’s statement of responsibility
g. Proxy

_____A switch between two alternative generally accepted accounting principles for recording certain transactions (switching from FIFO to LIFO, for example).

Step 1 of 2

Accounting Policy

Accounting policies are the fundamentals and accounting treatments the management of the company has followed for the preparation and presentation of the financial statements. There are several alternative treatments and methods at various segments of the accounting, which makes it necessary for the company to disclose them.