Asked by Ouita Weeden-Dawson on May 16, 2024
Verified
The full disclosure principle says that if a change is made to the inventory valuation method, the company should:
A) disclose the change.
B) show the effects of the change on profit and inventory valuation.
C) show justification for the change in a footnote on the financial reports.
D) All of these answers are correct.
Full Disclosure Principle
The accounting principle that requires companies to fully disclose on their financial reports changes in accounting procedures and methods along with effects of the change as well as justification for change.
Inventory Valuation Method
The approach used to assess and report the value of a company's inventory, including methods such as FIFO (First In, First Out), LIFO (Last In, First Out), and average cost.
Financial Reports
Documents that provide an overview of a business's financial condition, including balance sheets, income statements, and cash flow statements.
- Understand the core principles of uniformity and complete transparency in inventory valuation.
- Grasp the necessity of disclosing changes in inventory valuation methods.
Verified Answer
Learning Objectives
- Understand the core principles of uniformity and complete transparency in inventory valuation.
- Grasp the necessity of disclosing changes in inventory valuation methods.
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