The concept of adequate disclosure means that:
A)The accounting department of a business must inform management of the accounting principles used in preparing the financial statements.
B)The company must inform users of any significant facts necessary for proper interpretation of the financial statements,including events occurring after the financial statement date.
C)The independent auditors must disclose in the financial statements any and all errors detected in the company's accounting records.
D)The financial statements should include a comprehensive list of each transaction that occurred during the year.

Question

Quizplus · Accepted Answer

Adequate disclosure means that the company should provide all the necessary and relevant information in the financial statements that a user would need to properly understand and interpret the financial results. This includes disclosures about significant events or transactions that occurred after the financial statement date. Choice A only pertains to informing management, and Choices C and D are incorrect in that they are not comprehensive enough or relevant to the concept of adequate disclosure.

The Concept of Adequate Disclosure Means That