Which accounting principle stipulates that a business must disclose all relevant financial information?

The correct choice is the Full Disclosure Principle. This principle mandates that a business must provide all relevant and material information in its financial statements, which allows users of the financial statements to make informed decisions. Disclosing this information involves transparency about the company’s financial position, performance, and any risks that may influence future performance. It helps ensure that stakeholders, such as investors and creditors, are fully aware of the circumstances surrounding the financial health of the business.

The Full Disclosure Principle is critical in maintaining trust and integrity in financial reporting, as incomplete information may lead to misinterpretations and poor decision-making by external users.

Other principles, while important in accounting, do not address the requirement for comprehensive disclosure. The Materiality Principle focuses on the significance of information and allows for omitting details that are not material. The Matching Principle concerns the timing of expenses and revenues, ensuring they are recorded in the same period. The Revenue Recognition Principle outlines the conditions under which revenue can be recognized in the financial statements, but it does not govern the disclosure of information.