Question

Apart from statutory requirements good accounting practice also demands all significant information should be fully and fairly disclosed in the financial statements. This is as per _________________.

• A. Convention of disclosure
• B. Convention of materiality
• C. Convention of consistency
• D. Convention of conservatism

Answer 1

The correct option is A Convention of disclosure

The principle of full disclosure requires that all material and relevant facts concerning financial performance of an enterprise must be fully and completely disclosed in the financial statements and their accompanying footnotes.

This is to enable the users to make correct assessment about the profitability and financial soundness of the enterprise and help them to take informed decisions.

Hence, the convention of disclosure is a good accounting practice for the firm.