The Full Disclosure Principle

question 166

Multiple Choice

The full disclosure principle:

• A)Is also called the consistency principle.
• B)Prescribes that companies use the same accounting method for inventory valuation period after period.
• C)Is not subject to the materiality principle.
• D)Is only applied to retailers.
• E)Prescribes that the notes to the financial statements report when a change in inventory valuation method is made, its justification and its effect on net income.

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Definitions:

Relevance

The extent to which something is pertinent or applicable to the issue being considered.

Timeliness

The degree to which a given activity or response is done or occurs at a suitable or opportune time.

Task at Hand

The immediate job or duty that requires attention, focus, and completion by an individual or team.

Reliable Information

Information that is consistently accurate and trustworthy over time.