Which of the Following Principles States That a Business's Financial

question 41

Multiple Choice

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

• A) conservatism
• B) materiality concept
• C) disclosure principle
• D) consistency principle

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Definitions:

Liabilities

Financial obligations or debts that a company owes to outside parties, which must be paid back in the future.

Liabilities

Financial obligations or debts that an entity owes to others, which need to be settled over time via the transfer of economic benefits.

Creditors

Individuals or entities that a company owes money to for goods or services that have been delivered but not yet paid for.

Debtors

Individuals or companies that owe money to another party, often referred to in the context of accounts receivable.