One element of the objective of financial reporting is to provide
A) information about the investors in the business entity.
B) information about the liquidation values of the resources held by the enterprise.
C) information that is useful in assessing cash flow prospects.
D) information that will attract new investors.

Question

Quizplus · Accepted Answer

One of the objectives of financial reporting is to provide information that is useful in assessing cash flow prospects. This includes information about the entity's past performance as well as its future prospects. In order to make informed decisions about investing in a particular business, investors need to understand the cash flow potential of that business. Additionally, other stakeholders such as creditors and suppliers also need to understand the cash flow prospects of the entity in order to make informed decisions about extending credit.

One Element of the Objective of Financial Reporting Is to Provide