When does inadequate disclosure occur?
A) When a company attempts to overstate assets to make their financial position look better
B) When management makes statements that are wrong in its annual report or any other media
C) When assets are not written down to their appropriate values because insufficient depreciation is recorded
D) When a company understates its liabilities and overstates its revenues and net income

Question

Quizplus · Accepted Answer

Inadequate disclosure occurs when management makes statements that are wrong in its annual report or any other media. This may include omitting important information or not providing enough detail for investors to make informed decisions. Overstating assets, understating liabilities, and insufficient depreciation may also be indicators of inadequate disclosure, but the most direct answer is choice B.

When Does Inadequate Disclosure Occur