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
• B. Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements
• 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
• D. Disclosure of any financial facts significant enough to influence the judgment of an informed reader

Answer 1

Answer: (D)

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.