The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:
A)Historical cost principle
B)Materiality principle
C)Full disclosure principle
D)Going concern principle
E)Business entity principle

Question

Quizplus · Accepted Answer

The full disclosure principle requires that all significant noncash financing and investing activities be reported on the statement of cash flows in order to provide a complete picture of a company's cash inflows and outflows. The historical cost principle relates to the initial recording of assets at their original cost, the materiality principle states that financial information should only be reported if it is significant enough to influence decisions, the going concern principle assumes that a company will continue to operate indefinitely, and the business entity principle requires a company's financial information to be separate from that of its owners or other entities.

The Accounting Principle That Requires Significant Noncash Financing and Investing