The principle of adequate disclosure means that a company should disclose:
A) Only the important monetary information.
B) All confidential information regarding the company.
C) Any financial facts that a reasonable informed person would consider necessary for the proper interpretation of the financial statements.
D) Only subsequent events.

Question

Quizplus · Accepted Answer

The principle of adequate disclosure requires a company to disclose any financial information that a reasonable informed person would consider necessary for the proper interpretation of the financial statements. This includes material information about the company’s financial position, performance, and cash flows. It is not limited to only the important monetary information and does not require all confidential information to be disclosed. Additionally, it may also require disclosure of events or transactions that occurred after the financial statement date (subsequent events).

The Principle of Adequate Disclosure Means That a Company Should