Explain about full disclosure principle, Accounting Basics

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Q. Explain about full disclosure principle?

The full disclosure principle states that information significant enough to influence the decisions of an informed user of the financial statements must be disclosed. Depending on its nature companies must disclose this information either in the financial statements or in notes to the financial statements or else in supplemental statements. In judging whether or not to release information it is better to make a mistake on the side of too much disclosure rather than too little. Many lawsuits against CPAs as well as their clients have resulted from inadequate or misleading disclosure of the underlying facts. We recapitulate the major principles and describe the importance of each.


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