The full disclosure principle
A) Requires that when a change in inventory cost flow assumption is made, the notes to the statements report the type of change
B) Requires that when a change in inventory cost flow assumption is made, the notes to the statements report the justification for the change
C) Requires that any change in net income due to changes in the inventory cost assumption be disclosed
D) Does not require a company to use one cost flow assumption exclusively
E) All of the above

Question

Quizplus · Accepted Answer

The full disclosure principle requires all of the options listed, including reporting the type and justification for a change in inventory cost flow assumption, disclosing any impact on net income from the change, and allowing a company to use multiple cost flow assumptions. This principle ensures that users of financial statements have all relevant information available to make informed decisions.

The Full Disclosure Principle