Which accounting assumption or principle is being violated if a company is a party to major litigation that it may lose and decides not to include the information in the financial statements because it may have a negative impact on the company's stock price?
A) Full disclosure.
B) Going concern.
C) Historical cost.
D) Expense recognition.

Question

Quizplus · Accepted Answer

The accounting assumption of full disclosure requires companies to include all relevant information in their financial statements, regardless of whether it may have a negative impact on the company's stock price. By choosing not to include information about major litigation, the company is violating the full disclosure principle.

Which Accounting Assumption or Principle Is Being Violated If a Company