Which view of the objectives of general purpose financial reporting do you regard as the most important? Why?

Expert Solution

The objective of the general purpose financial reporting is to provide relevant information to investors, banks and other financial Institutions, creditors, other third parties, etc to take decisions relating to investing in the company. All these parties have different viewpoints in accessing the risk.

Creditors: They analyse the financial reports to decide how much credit should be allowed to the company and for what period.

Banks: They use the financial reports to take decisions relating to the sanction of loans to the company.

Investors: The investors use the financial reports to take decisions whether to invest in the company or not and how much return they can expect in future.

Among these, the viewpoint of the investors is the most important as there are many in numbers. The common public are also involved in investing. The viewpoint of the investor should be given the most priority as the company raises maximum funds from them. If the financial reports gives a positive indication to the investors and enhance their confidence then the company can raise sufficient funds for the growth of the business.

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ekkarill92 answered 1 year ago

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