A primary objective of financial reporting is to:
A) assist investors in predicting prospective cash flows.
B) assist investors in analyzing the economy.
C) assist suppliers in determining an appropriate discount to offer a particular company.
D) enable banks to determine an appropriate interest rate for their commercial loans.

Question

Quizplus · Accepted Answer

The primary objective of financial reporting is to provide information that is useful to investors, creditors, and other stakeholders in making decisions about providing resources to an entity. One way that this information can be useful to investors is by helping them predict prospective cash flows, which is a key factor in determining the value of an investment. Financial reporting can also provide other information that may be useful to investors, such as information about a company's performance, financial position, and risks.

A Primary Objective of Financial Reporting Is To