Faithful representation is a characteristic of external financial reporting that means:
A)the financial reports of a business are assumed to include the results of only that business's activities.
B)financial information can be compared across businesses because similar accounting methods are applied.
C)the results of business activities are reported using an appropriate monetary unit.
D)financial information depicts the economic substance of business activities.

Question

Quizplus · Accepted Answer

Financial information possesses the characteristic of representation faithfulness if it depicts the economic substance of business activities.The separate entity assumption means that only the activities of the business are included in its financial reports.Comparability refers to the ability of financial information to be compared across businesses because similar accounting methods have been applied.The unit of measure assumption states that the results of business activities are reported in an appropriate monetary unit.

Faithful Representation Is a Characteristic of External Financial Reporting That