- 2 Marks
AA – L2 – SA – Q1.1 – True and Fair View
Question
Although the phrase ‘true and fair view’ has no legal definition, which of the following most accurately describes its meaning with regard to the financial statements of a company?
A The financial statements have been properly prepared in accordance with the law
B The financial statements are free from material misstatements, and they are presented in an understandable and unbiased way
C All items in the financial statements are factually accurate
D The financial statements have been audited
Answer
B
Explanation:
The phrase ‘true and fair view’ refers to financial statements that are free from material misstatements and presented in a way that is understandable and unbiased. Option B accurately captures this by emphasizing the absence of material errors and the clarity and neutrality of presentation. Option A focuses only on legal compliance, which is narrower than the concept. Option C implies absolute factual accuracy, which is impractical due to estimates and judgments in accounting. Option D is incorrect as auditing is a process to assess, not a definition of true and fair view.
- Tags: Assurance, Auditing, Financial Statements, ICAG, True and Fair View
- Level: Level 2
- Uploader: Salamat Hamid