Disclosure
In one sentencePresenting the important information that the reader of the financial statements needs to understand them and make a decision, either in the statements themselves or in the attached notes.
Simply put
Information is material if omitting or misstating it could change the decision of someone reading the statements, such as a bank, a partner or an investor. Such information must be disclosed.
Good disclosure does not mean saying more, but saying it clearly: one important piece of information written clearly is better than pages of general text that add nothing.
Example
A trading business mortgaged its building as security for bank financing. The mortgage does not change the figures for the building or the loan, but it discloses it in the notes because a bank or supplier reading the statements needs to know the building is not free of charges.
Don't confuse it with
Notes to the financial statementsDisclosure is a principle, and the notes are one of its main places.