The full disclosure principle, as adopted by the accounting profession, 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.

Question

Quizplus · Accepted Answer

The full disclosure principle requires disclosure of any financial facts significant enough to influence the judgment of an informed reader. It does not require all information related to an entity's business and operating objectives to be disclosed, nor does it require information about each account balance to be included in the notes to the financial statements. The purpose of the full disclosure principle is to provide users of financial statements with relevant and reliable information to make informed decisions.

The Full Disclosure Principle, as Adopted by the Accounting Profession