BASIC
This query is : Resolved
25 July 2010
Concept of True and Fair, applicable to the financial state of a company:---
The main object of audit is to find out whether the financial statements prepared by a company show the true and fair view of the financial state of affairs of a company and if not then in what respect they are not showing.
It will be said that the financial statements and the books of account show true and fair view of the business when the following conditions are fulfilled:
*The books of account have recorded all the business transaction correctly.
*The books of account have been prepared according to the accepted principles of accountancy and have followed accounting standards issued by different regulatory bodies.
*There are no errors and frauds present in the books of account.
*The financial statements that have been prepared by the company are in conformity with the books of account.
*In the preparing the financial statements, all mandatory provisions of companies Act and other relevant laws have been followed.
When all the above facts are taken care by a concern in preparing the financial statements, it will be said that these statements show true and fair view of the affairs of that business concern.
The main object of audit is to find out whether the financial statements prepared by a company show the true and fair view of the financial state of affairs of a company and if not then in what respect they are not showing.
It will be said that the financial statements and the books of account show true and fair view of the business when the following conditions are fulfilled:
*The books of account have recorded all the business transaction correctly.
*The books of account have been prepared according to the accepted principles of accountancy and have followed accounting standards issued by different regulatory bodies.
*There are no errors and frauds present in the books of account.
*The financial statements that have been prepared by the company are in conformity with the books of account.
*In the preparing the financial statements, all mandatory provisions of companies Act and other relevant laws have been followed.
When all the above facts are taken care by a concern in preparing the financial statements, it will be said that these statements show true and fair view of the affairs of that business concern.
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