Commercial Applications
According to this principle, accounts should be prepared in such a way that all the material information required by users of financial statements is clearly disclosed.
- Matching principle
- Principle of full disclosure
- Dual aspect principle
- Realisation concept
Answer
Principle of full disclosure
Reason — The Principle of Full Disclosure requires complete and understandable reporting of all significant information relating to the economic affairs of the firm. Material facts must not be concealed and may be disclosed via footnotes or annexures to financial statements.
Related Questions
It is due to this concept that financial statements are prepared at regular intervals, generally one year.
- Money measurement concept
- Accounting period concept
- Business entity concept
- Realisation concept
This principle suggests that every debit has a corresponding and equal credit.
- Matching principle
- Principle of full disclosure
- Dual aspect principle
- Realisation concept
According to this principle, cost of a particular period should be charged from the revenue of same period only.
- Matching principle
- Principle of full disclosure
- Dual aspect principle
- Realisation concept
Assertion (A): According to the Prudence Principle, the valuation of Closing Stock is based on either its cost price or its net realizable value, whichever is lower.
Reason (R): This practice ensures that a business firm does not present a more favourable financial position than what it actually is.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.