Financial Statements

Financial reporting is largely an effort to assess financial performance, that is, how well or how poorly organizations performed with money entrusted to them. Financial reporting is considered a part of businesses accountability. Financial reports should have an end goal of presenting useful information to the users so they can make appropriate investment decisions. Information should be clear and free of error. Financial reporting is not an end in itself but is intended to provide information that is useful in making business and economic decisions (Financial Accounting Standards Board, 1978).

Since financial reporting is geared to provide lenders and shareowners of your business with key financial data. Therefore the most important objective is to provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. This is extremely critical because lenders and shareholder primarily make up an organization, so providing them with the needed accurate information to steer their future decisions is critical.

The objective that holds the least weight is the provision of information pertaining to the economic resources of an enterprise, the claims to those resources and the effects of transactions, events, and circumstances that change its resources and claims to those resources. Although lenders and shareholders are concerned with economic resources of an enterprise, they are particularly more concerned with their end results, which is the hard core financial data; such as , balance sheet information to determine if the business is making a profit or suffering a loss, and how much.

Reference

Financial Accounting Standards Board. (1978). Statement of financial accounting concepts No. 1: Objectives of financial reporting by business enterprises. Stamford, CT: Author