The full disclosure principle says that if a change is made A the company should

Question

The full disclosure principle says that if a change is made A the company should disclose the change B the effects of the change on profit and inventory valuation should be disclosed C the company should show justification for the change in a footnote of the financial D all of the above The full disclosure principle says that if a change is made A the company should disclose the change B the effects of the change on profit and inventory valuation should be disclosed C the company should show justification for the change in a footnote of the financial D all of the above A the company should disclose the change B the effects of the change on profit and inventory valuation should be disclosed C the company should show justification for the change in a footnote of the financial D all of the above

Explanation / Answer

Answer: D

The priciple suggests that an entity should disclose the fact that there is a change, if there is material impact on financial statements then such effect should be given, and lastly the management of the entity should justify through footnote why such change becomes necessary.

Therefore, all of the points are relevant here. These are required for protecting the interest of financial statements’ users and their decision making.

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