Question

Which of the following statements is INCORRECT? A : Faithful representation results when different companies use the same accounting principles and methods. B : An item is material when its size makes it likely to influence the decision of an investor or creditor. C : The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decisions. D : Faithful representation means that information is complete, unbiased, and free of error.

Answer 1

Answer: A : Faithful representation results when different companies use the same accounting principles and methods. Is INCORRECT.

Explanation: All statements are correct except for A because Faithful representation means that information is complete, unbiased, and free of error regardless of the accounting methods used. Faithful representation means that the numbers reflect reality.