The full disclosure principle:
A) Prescribes that when a change in inventory valuation method is made, the notes to the statements report the type of change, its justification and its effect on net income.
B) Requires that companies use the same accounting method for inventory valuation period after period.
C) Is not subject to the materiality principle.
D) Is only applied to retailers.
E) Is also called the consistency principle.

Question

Quizplus · Accepted Answer

The full disclosure principle requires companies to report any material information that could affect financial statement users' decisions. When a change in inventory valuation method is made, the notes to the statements should report the type of change, its justification, and its effect on net income, in accordance with the full disclosure principle.

The Full Disclosure Principle