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Accounting Terms > Disclosure

Disclosure – The full disclosure accounting principle necessitates that any transaction or event that could have a material impact on the financial statements should be fully disclosed. Examples of these could include a major customer who is presently experiencing difficulty paying their invoices on time, an expected foreign exchange rate change that could be material to the financial statements, or a major change to an accounting interpretation.

A firm’s financial statements are used by any number of different types of entities, such as creditors, investors, potential investors, and stakeholders. The readers of a company’s financial statements, which include the income statement, balance sheet, statement of stockholders’ equity, and cash flow statement, need to understand the accounting strategies and methods used to create those statements.