Faithful Representation
Accounting glossary · Understand, connect, apply
Faithful representation means financial information depicts the economic substance it is intended to describe as completely, neutrally and without material error as possible.
Example
A receivable is presented together with an appropriate estimate of credit losses rather than as certain future cash.
Remember the difference
An estimate can be faithfully represented without being perfectly precise if its process, assumptions and uncertainty are explained.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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