What is the major objective of financial reporting?
A) Provide information that is useful to management in making decisions.
B) Provide information that clearly portray nonfinancial transactions.
C) Provide information that is useful to present and potential equity investors, lenders, and other creditors in making decisions..
D) Provide information that excludes claims to the resources.

Question

Quizplus · Accepted Answer

The major objective of financial reporting is to provide information that is useful to present and potential equity investors, lenders, and other creditors in making decisions. This information helps them to assess the company's financial performance and their prospects for future cash flows. While providing information useful to management and portraying nonfinancial transactions accurately are important aspects of financial reporting, the primary objective is to provide information for external users of financial statements. The objective is also not to exclude claims to the resources but to provide a comprehensive and accurate picture of a company's financial position and performance.

What Is the Major Objective of Financial Reporting