GAAP frequently requires financial statement users to accept a compromise that favors reliability over faithful representation.

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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.

GAAP Frequently Requires Financial Statement Users to Accept a Compromise