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So, I want to understand true and fair and came across this:
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? ‘True’ means that the financial statements are more or less arithmetically accurate.
? ‘Fair’ is a slightly more difficult concept and means they are not misleading.
Something can be arithmetically accurate, yet still give an incorrect impression””””But i dont get that? Can someone give a example of that
Something can be arithmetically accurate, yet still give an incorrect impression””””How?
Thank You
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Let me give you a very simple example. Imagine a company has inventories, some of which are damaged. While publishing its financial statements, if the company shows the inventories at their cost price, it will be arithmetically correct, but the shareholders will be misled because they will be given an incorrect impression about the goods, which the company cannot sell at a full price. That way the shareholders will think the company has more assets than it actually does. Hope you have a better understanding about it now.
<cite>@mmshuvo said:</cite>
Let me give you a very simple example. Imagine a company has inventories, some of which are damaged. While publishing its financial statements, if the company shows thk the company has more assets than it actually does. Hope you have a better understanding about it now.Thank you 🙂
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