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Question

The full disclosure principle, as adopted by the accounting professionals, is best described by which of the following?

A
All information related to an entity's business and operating objectives is required to be disclosed in the financial statements
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B
Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements
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C
Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision
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D
Disclosure of any financial facts significant enough to influence the judgment of an informed reader
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Solution

The correct option is C Disclosure of any financial facts significant enough to influence the judgment of an informed reader
The full disclosure principle requires a company to provide the necessary information, so that people who are accustomed to reading financial information are able to make informed decisions regarding the company.

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