Full Disclosure Principle – This principle states that all past, present and future information that may have had an impact on the financial performance of the company needs to be fully disclosed. The historical performance of a company is readily available, but examining the numbers does not always provide the entire financial picture of a company. Sometimes there are alternative situations that need to be reported. Pending or current lawsuits are one example of a transaction that could severely impact a company’s bottom line. In addition, incomplete financial transactions or any other conditions that could impact the company’s performance must also be disclosed. Most of these transactions are disclosed in the footnotes to the financial statements.
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