Objectives: The aim of this study was to explore what effects the carer's burden and patient's neuropsychiatric symptoms have on carer's report on patient's cognitive functioning and instrumental activities of daily living (IADL). Methods: We included 1,832 patients, 742 with mild cognitive impairment and 1,090 with dementia [mean age 75.2 years (SD 9.5), 56% women]. The following scales were used: Informant Questionnaire on Cognitive Decline in the Elderly (IQCODE), Lawton and Brody IADL Scale, Neuropsychiatric Inventory Questionnaire (NPI-Q), Relatives' Stress Scale (RSS), Mini-Mental State Examination (MMSE), and Clock Drawing Test (CDT). Correlation analyses and multiple linear regression analyses were carried out to explore which factors were associated with IQCODE and IADL. Results: Spouses scored lower on the IQCODE compared with non-spouses in spite of equivalent MMSE and CDT scores. In a multiple linear regression analysis using IQCODE as a dependent variable, beta for MMSE was -0.368 (p < 0.001) adjusted for demographic factors. After adjusting also for RSS and NPI-Q, MMSE beta was -0.279 (p < 0.001), RSS beta 0.294 (p < 0.001), and NPI beta 0.237 (p < 0.001). Similar results were found using IADL as the dependent variable. Conclusion: Carer's burden and neuropsychiatric symptoms of the patient are important biasing factors when carers report on cognitive function and IADL.