Question

Explain the principle of full disclosure.

Answer 1

This principle implies that the accounting report should be full and accurate. If there is any material fact which can affect the profitability of the concern in the future,
we must disclose it to the users whether it is legally required or not. There are standard forms for Balance Sheet, Notes to Balance Sheet and Statement of Profit and Loss. It is a legal requirement for joint stock companies to present information in the standardised form.

Disclosure of accounting information means that the management should reveal its business situation correctly to the users including the facts, matters, and policies which are even not legally required but are material.