Accounting Policies or Methods: Accounting policies are the methods, rules, or valuation measures accepted and thus followed by a company in recording financial transactions thereby considered while preparing the financial statements. The policies taken up by the company needs to be disclosed so to respect the disclosure principle. Full Disclosure Principle: Full disclosure principle is one of the accounting principles which states that the company should reveal or unfold all the relevant facts and figures especially regarding the accounting policies followed by the entity in preparing financial statements which apparently affects the decisions of the reader‘s. Disclosure can be made either through notes or schedules. To Identify: Full disclosure principle prescription regarding the change in the accounting methods.

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Chapter 5, Problem 5DQ

To determine

Accounting Policies or Methods:

Accounting policies are the methods, rules, or valuation measures accepted and thus followed by a company in recording financial transactions thereby considered while preparing the financial statements. The policies taken up by the company needs to be disclosed so to respect the disclosure principle.

Full Disclosure Principle: Full disclosure principle is one of the accounting principles which states that the company should reveal or unfold all the relevant facts and figures especially regarding the accounting policies followed by the entity in preparing financial statements which apparently affects the decisions of the reader‘s. Disclosure can be made either through notes or schedules.

To Identify: Full disclosure principle prescription regarding the change in the accounting methods.

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In 2012 XYZ Co. had sales of $74 billion and a net income of $23 billion, and its year-end total assets were $200 billion. The firm's total debt-to-total assets ratio was 45.3%. Based on the DuPont equation, what was XYZ Co.'s ROE in 2012? a) 22.97% b) 8.67% c) 25.62% d) 21.02% e) 14.01%

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