BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Transactions are presented any way that is considered appropriate.
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Transactions are presented in such a way as to maximise profit for the year.
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Transactions are presented in such a way to maximise asset values in the statement of financial position.
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Transactions are presented to reflect their commercial substance of a transaction rather than their legal form.
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Detailed explanation-1: -Q. Which of the following statements best explains the principle of faithful representation in relation preparation of the annual financial statements? Transactions are presented any way that is considered appropriate.
Detailed explanation-2: -Which of the following is the best description of “faithful representation” in relation to information in financial statements? The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users.
Detailed explanation-3: -Which ONE of the following statements describes faithful representation, a qualitative characteristic of faithful representation? Revenue earned must be matched against the expenditure incurred in earning it.
Detailed explanation-4: -To be a perfectly faithful representation, a depiction would have three characteristics. It would be complete, neutral and free from error.