General accounting principles consist of four basic principles, four assumptions

Question

General accounting principles consist of four basic principles, four assumptions, and two constraints that are the building blocks of GAAP (Generally Accepted Accounting Principles). These ten general principles are: the measurement principle, the revenue recognition principle, the matching principle, the full disclosure principle, the going concern assumption, the monetary unit assumption, the time period assumption, the business entity assumption, the materiality constraint, and the cost-benefit constraint. Share with your classmates which one of these ten general accounting principles you believe to be the most important and why

Explanation / Answer

THE FULL DISCLOSURE PRINCIPLE

This principle states that every aspect, accounting information, principles followed, and every piece of information which may be of importance for the viewer of financial statements are required to be disclosed.

This principle not only includes figures and numbers but also the other accounting principles being followed. This principle directly affects the reliability of the financial information. Disclosures being made under this principle makes sure that the information is being read and understood in a way it was meant. This principle makes sure that the reader is made known about the various choices of principles and methods made while preparing the financial information as the different choices lead to different result.

With this principle there would be question about the reliability, correctness of financial statements and whether they true and fair picture of the entity.

So according to me this principle is most important as the very basis of confidence of the reader is somewhere based on this principle and the absence of this principle will lead to confusions and wrong decisions which are based on information in financial information

Please give a thumps up if you fing this information useful.

Thanks & Regards

Team Chegg Study

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