Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 1: Question 4Q (page 22)

What is the objective of financial reporting?

Short Answer

Expert verified

Financial reportingprovides relevant information regarding the financial position and the business performance with the motive of making vital economic decisions.

Step by step solution

01

Understanding financial reporting

A process that records and interprets the company’s financial data for its users is known as financial reporting; it is one of the important parts of the business.

02

Objectives of financial reporting

Identifying the prime objectives and purpose of financial reporting
Financial reporting involves the following objectives:

  • To provide relevant data to the management for facilitating the decision-making process.
  • To provide information to the general public and shareholders, in the case of large listed companies.
  • To identify economic resources, their sources, and their utilization over a period.
  • To provide a picture of management to the stakeholders.
  • To comply with statutory requirements.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What was the Committee on Accounting Procedure, and what were its accomplishments and failings?

(Objective of Financial Reporting) Karen Sepan, a recent graduate of the local state university, is presently employed by a large manufacturing company. She has been asked by Jose Martinez, controller, to prepare the company’s response to a current Preliminary Views published by the Financial Accounting Standards Board (FASB). Sepan knows that the FASB has a conceptual framework, and she believes that these concept statements could be used to support the company’s response to the Preliminary Views. She has prepared a rough draft of the response citing the objective of financial reporting.Instructions

  1. Identify the objective of financial reporting.
  2. Describe the level of sophistication expected of the users of financial information by the objective of financial reporting.

Question: What might explain the fact that different accounting standard-setters have developed accounting standards that are sometimes quite different in nature?

GAAP is comprised of:

  1. FASB standards, interpretations, and concepts statements.
  2. FASB financial standards.
  3. FASB standards, interpretations, EITF consensuses, and accounting rules issued by FASB predecessor organizations.
  4. any accounting guidance included in the FASB Codification.

GAAP stands for:

  1. governmental auditing and accounting practices.
  2. generally accepted attest principles.
  3. government audit and attest policies.
  4. generally accepted accounting principles
See all solutions

Recommended explanations on Business Studies Textbooks

Nature of Business

Read Explanation

Corporate Finance

Read Explanation

Operational Management

Read Explanation

Change Management

Read Explanation

Human Resources

Read Explanation

Organizational Communication

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free