Full Disclosure Principle

Topics: Enron, Arthur Andersen, Accounting scandals Pages: 3 (748 words) Published: November 10, 2013
Running Title: Full Disclosure Principle

Full Disclosure Principle

Full Disclosure Principle

Full disclosure plays an important role in the preparation of a company or business financial statements. Full disclosure benefits the user, company, or business. This principle tries to prevent companies or businesses from provided their user with false or over stated financial information about the company or business financial position. This essay will discuss, full disclosure principle as it relates to accounting. Another area in which will be focus on is why disclosure has increased substantially in the last 10 years. Let discuss the full disclosure principle.

Full disclosure principle tries to provide an examination of why a company or business would need to use notes in the preparation of their financial statements. Note provide background information on item within the financial statements. They provided additional insight on certain items listed in the financial statement, which can included the company or business accounting policies, number of share issue and outstanding, type of inventory method the company is using, which can be either FILO, FIFO.

The Full disclosure principle also provided information on the requirement for different type of business. Under the full disclosure principle businesses that have many different type of product lines are in some situation require to segment the product information. This provided user of the financial statement the opportunity to understand how this would affect the company profit, future growth of the company and product lines and any risk related to carrying and selling certain product.

The principle also provided background information on the different type problem that can arise from preparing interim financial statement. According to Kieso, Weygandt, and Warfield, (2007), stated “The full disclosure principle calls for financial...
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