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General Help in understand a phrase "True and Fair"

Forums › ACCA Forums › General ACCA Forums › General Help in understand a phrase "True and Fair"

  • This topic has 2 replies, 2 voices, and was last updated 11 years ago by Mark.
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  • July 14, 2013 at 3:04 pm #133774
    Mark
    Member
    • Topics: 11
    • Replies: 4
    • ☆

    So, I want to understand true and fair and came across this:

    “”””
    ? ‘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

    July 14, 2013 at 8:37 pm #133776
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 4
    • ☆

    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.

    July 15, 2013 at 10:03 am #133952
    Mark
    Member
    • Topics: 11
    • Replies: 4
    • ☆

    <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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