Application of the full disclosure principle
A) is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits.
B) is violated when important financial information is buried in the notes to the financial statements.
C) is demonstrated by the use of supplementary information explaining the effects of financing arrangements.
D) requires that the financial statements be consistent and comparable.

Question

Quizplus · Accepted Answer

The full disclosure principle requires that all material information about a company's financial performance and position should be included in the financial statements or in the notes. Supplementary information, such as explanations of financing arrangements, can help to provide further transparency and meet the requirements of the full disclosure principle. Option A is incorrect, as the costs of disclosure should not outweigh the benefits. Option B refers to disclosure being buried, which is not in line with the full disclosure principle. Option D is a relevant principle, but not specific to the full disclosure principle.

Application of the Full Disclosure Principle