This has led to the creation of a considerable amount of footnote disclosure that accompanies many financial statements. The full disclosure principle states that you should include in the financial statements of an entity all of the information that might affect a reader's understanding of those statements. ![]() This prevents the financial results of multiple entities from becoming entangled. The economic entity principle states that you should keep separate the transactions of different business entities. This principle is less relevant as the accounting standards are pushing more in the direction of fair value. The cost principle states that you should only record a transaction at its original acquisition cost. This gives you more consistent reported results. The consistency principle states that, once you follow an accounting principle or method, you should continue to do so in the future.
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