Asked by Erinn Whitlock on May 08, 2024
Verified
GAAP frequently requires financial statement users to accept a compromise that favors reliability over faithful representation.
Reliability
The degree to which an assessment tool produces stable and consistent results over time.
Faithful Representation
An accounting principle that financial statements should accurately reflect the underlying reality of a company's financial status.
- Familiarize oneself with the theory of reliable presentation in accounting records.
Verified Answer
TH
Taylor HelfrichMay 10, 2024
Final Answer :
True
Explanation :
GAAP (Generally Accepted Accounting Principles) prioritize reliability over faithful representation in financial statements. While faithful representation aims to present the economic reality of transactions and events, reliability ensures that the information provided is accurate and verifiable. As a result, GAAP standards often require a compromise that favors reliability over faithful representation.
Learning Objectives
- Familiarize oneself with the theory of reliable presentation in accounting records.