The financial statements in the annual report of a corporation contain footnotes explaining the methods used to depreciate the firm's equipment. This practice is an example of
A)the accrual principle.
B)the consistency principle.
C)the conservatism constraint.
D)the full disclosure principle.

Question

Quizplus · Accepted Answer

The full disclosure principle requires that all material information that could impact financial statements be disclosed to users. The footnotes explaining the methods used to depreciate the firm's equipment are an example of this principle because they provide additional information about the firm's accounting practices.

The Financial Statements in the Annual Report of a Corporation