Question

Which of the following statements best describes the full disclosure accounting principle?

1) assumes that the business owner will survive for the foreseeable future
2) required for every accounting transaction, whenever possible
3) requires that all events that would make a difference to the user of a financial statement be accounted for
4) requires that all the facts necessary for the accurate interpretation of a financial statement be provided

Answer 1

The full disclosure accounting principle ensures that all necessary facts for accurate interpretation of financial statements are provided, focusing on material information for economic decision-making.

Step-by-step explanation:

The full disclosure accounting principle is best described by the statement that it requires that all the facts necessary for the accurate interpretation of a financial statement be provided. This principle means that financial statements should include all information that could affect a reader's understanding of those statements. The full disclosure principle does not require the disclosure of every transaction but instead focuses on material information that influences the economic decisions of users of financial statements.