The full disclosure principle refers to:
A)Financial reports should disclose only material transactions related to a company's business activities.
B)Financial reports should disclose every transaction related to a company's business activities.
C)Financial reports should present all information needed to properly interpret results of a company's business activities.
D)Financial reports should disclose all future transactions related to a company's business activities.

Question

Quizplus · Accepted Answer

Full disclosure requires companies to present all information needed to properly interpret the results of their business activities.This does not require that every single transaction be explained in detail,but that adequate information necessary allow financial statement users to fairly interpret the financial reports are disclosed.Financial reports must include both material and individually immaterial transactions because individually immaterial amounts may combine to produce a material amount.Future transactions are not disclosed (unless they are material in amount and completed prior to finalizing the financial statements).

The Full Disclosure Principle Refers To