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what is the Objective of financial reporting/define objectives of financial reporting in short words.




What is the objective of financial reporting?

Financial reporting
  • It is the process of producing statements which explain the financial position of an organization to management, investors and the government. 
  • it includes balance sheet, income statement, statement of cash flows, and statement of changes in equity and the notes to the account.


Objectives
  • The primary objective of financial reporting is to provide useful information for decision making. 
  • The Main objective of financial reporting is to deliver this information to the creditors and the stakeholders of your business who have right to know about it. 
  • Another objective is to specify cash flow information which is need of investors and creditors. 
  • Financial reporting should provide information about liquidity, solvency, and funds flows. 
  • Last but not the least objective is the need for information about economic resources and claims to those resources. This information is key to predicting future cash flows.
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