Final answer:
The GAAP principle of full disclosure mandates that companies report their inventory cost flow methods in their financial statements to ensure transparency and consistency in financial reporting.
Step-by-step explanation:
The GAAP principle of full disclosure requires companies to disclose the inventory cost flow methods used to prepare the financial statements. This principle ensures that businesses provide all the necessary information that can affect a reader's understanding of the financial statements, which includes the choice among methods like First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and weighted average cost. Companies are required to include this information in the notes to their financial statements, in accordance with GAAP (Generally Accepted Accounting Principles), providing transparency and uniformity in financial reporting.