Financial statements often contain information for which more detail and/or explanation is desired by the users of the statements. Additional detail may be provided in the notes to the statements. Explanation of management's view may be included in the MD&A (management's discussion and analysis) section of the annual report. These and other subjects related to full disclosure in financial reporting are discussed in this chapter.

Now that you have learned about the content of financial statements, Appendix 24A will help you to interpret the information conveyed in the statements; this appendix covers basic financial analysis. Because a lot of companies are engaged in international business activities, the subject of international accounting standards is an increasingly important one and is the topic of Appendix 24B.


  1. Review the full disclosure principle and describe implementation problems. The full disclosure principle calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader. Implementing the full disclosure principle is difficult because the cost of disclosure can be substantial and the benefits difficult to assess. Disclosure requirements have increased because of (1) the growing complexity of the business environment, (2) the necessity for timely information, and (3) the use of accounting as a control and monitoring device. ...

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