Application of the Full Disclosure Principle

question 25

Multiple Choice

Application of the full disclosure principle

• A)is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits.
• B)is violated when important financial information is buried in the notes to the financial statements.
• C)is demonstrated by the inclusion of information such as information about contingencies.
• D)requires that the financial statements be consistent and comparable.

---

Definitions:

Price Stickiness

A situation in markets where prices of goods do not adjust immediately to changes in supply and demand conditions.

Profit-Maximizing Price

The price at which a firm can sell its product to maximize its profit, determined by various factors including demand, cost of production, and market competition.

Oligopolist's MC Curve

The marginal cost curve for a firm in an oligopoly, illustrating the cost of producing an additional unit of output, which can influence pricing and output decisions in a market with few competitors.

Total Revenue

The total amount of money generated by a business from the sale of its products or services before any costs or expenses are subtracted.