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Disclosure principle, interim reports, types of opinions

21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

A. Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.
B. Disclosure of any financial facts significant enough to influence the judgment of an informed reader.
C. All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.
D. Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.

22) Companies should disclose all of the following in interim reports except

A. post-balance-sheet events.
B. seasonal revenue, cost, or expenses.
C. basic and diluted earnings per share.
D. changes in accounting principles.

23) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be

A. adverse.
B. exceptional.
C. unqualified.
D. qualified.

Solution Preview

21. B. Disclosure of any financial facts significant enough to influence the judgment of an informed reader.

Statement a is incorrect because there are other important stakeholders beyond an investor: lenders, bond holders, employees, creditors, debtors, for a few.
Statement c is too broad in content to be of any value.
Statement d is too ...

Solution Summary

The cited solution provides a good explanation for each question including why the other answers are incorrect.

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