Financial statements that do not include interpretation and explanation by management are in violation of which GAAP principle?
A) Principle of sincerity
B) Principle of continuity
C) Principle of full disclosure
D) Principle of regularity
E) Principle of prudence

Question

Quizplus · Accepted Answer

The principle of full disclosure requires companies to provide all necessary information in their financial statements to ensure that users can make informed decisions. This includes providing explanations and interpretations of the financial statements by management. Therefore, financial statements that do not include this information are in violation of the principle of full disclosure.

Financial Statements That Do Not Include Interpretation and Explanation by Management