Which one of the following statements is true?
- Free of error means financial statements have to be 100% accurate.
- Financial statements are prepared under the assumption that users have no knowledge of business or accounting.
- Transactions are accounted for and presented in accordance with their legal form rather than their substance and economic reality.
- Users must be able to compare the financial reports of an entity through time and be able to compare the financial reports of different entities in order to evaluate their relative financial position, performance, and changes in financial position.