What is faithful representation?

What is faithful Representation?

The faith full representation means that management does present all relevant information in the financial statements, faithful representation is basically a further explanation of reliable information . The faith full representation require the following things

1. Presentation of all required information: all information which is required to be represented is presented in the financial statements. it means all information relevant for the economic decision making are presented.

2. Presentation of all Expected information: All information which is expected to be presented is included in the financial statements.

Is an absolute faithful representation possible?

No, absolute faithful representation is not possible because there are number of inherent limitation involves in the preparation of financial statements. For example management has to make many estimates during the preparation of financial statement and it is not possible to accurately calculate the estimates and uncertainty.