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Individual Full Disclosure Paper

Yolonda Washington

ACC/421

February 4, 2014

Jennifer Cooper

Individual Full Disclosure Paper

What is the full disclosure principle in accounting? Why has disclosure increased substantially in the last 10 years? After reading the chapter, the full disclosure principle in accounting has been determined that the financial reporting is important enough that may manipulate any judgment made by the company and to advise the reader of the material. The reason for the substantial increase in the last 10 years is because the Enron Scandal that took place.

The Enron Scandal has created truthfully the accounting profession and as a result to show how new laws been placed into effect in order to prevent such scandals from happening over and over again.   Over the years there are 3 major reasons that contribute to the increase is disclosure as discussed in chapter 24, study objective 1. The three reasons are as follows: Complexity of the Business Environment, Necessity for Timely Information, and Accounting as a Control and Monitoring Device (Weygandt, and Warfield, K. D. (2012).

“Explain the need for full disclosure in financial reporting”

The full disclosure in financial reporting plays a major part in the company’s reports. After reading chapter 24 full disclosures affects many reports in accounting procedures depending on if the business is privately owned. The GAAP set many guidelines to obey and use for consistency in financial reporting. Financial reporting requires many business to use accrual basis accounting depending on how small business use of financial reporting. The full disclosures recognizes how the cash basis accounting, revenues are recognized when a sale is made no matter when a payment is received from any money made.

“Identify possible consequences of failing to properly disclose certain items in financial statements”

The full disclosure principle in accounting may significantly influence the decision of...