(25 words or less) As we have seen in this course, the financial reporting process involves...

(25 words or less) As we have seen in this course, the financial reporting process involves many estimates and judgments that are made by management. In your own words, why do people have trust in the financial reporting process?

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Expert Solution

Why do people and organizations need to have trust in the financial reporting process ?

Answer

Main objective of financial reporting process is to report useful information for making decisions about the reporting entity. The financial reporting process helps to create trust in the users of financial information. Financial reporting process provide a clear and unbiased picture of a company's financial health.

Additional points For Understanding

The financial reporting process helps to develops trust, but it also has to be trusted. Reporting and Auditing standards also help in building trust in financial repoting process. Financial statement are developed as result of financial reporting process. Financial statement are analysed for various purposes and by various users/stakeholders. Purposes could be to analyse credit worthiness, profitability, make cash flow projection, revenue projections etc. Users of fiancial statemnet are shareholders, lenders, bank, creditors emplyees etc. Thus users have trust in financial reporting process.

ekkarill92 answered 1 year ago

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