The accounting principle that requires important noncash financing and investing activities be reported on the statement of cash flows or in a footnote 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 companies to disclose all material information that could affect an investor's decision-making process. Noncash financing and investing activities are considered to be important and material and therefore must be reported either on the statement of cash flows or in a footnote. The other principles listed are unrelated to this accounting requirement.

The Accounting Principle That Requires Important Noncash Financing and Investing