Question

Identify the objective of financial reporting.

Answer 1

Financial reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the Organization over a period of time. According to the International Accounting standard Board , The objectives of Financial reporting is to provide information about the financial position , performance , and changes , in financial position of an enterprises that is useful to a wide range of users in making economic decision.

1. To provide information to the management of an Organization which is used for the purpose of planning , analysis , benchmarking , and decision making.

2. Providing information to the investors , promotors , debt providers , and creditors which is used to enable them to male rational and prudent decisions regarding investment , credit etc.

3. Providing information to shareholders and public at large, in case of listed companies about various aspects of an Organization.

4. Providing information about the economic resources of an Organization , claim to those resources ( Liabilities and owners equity ) and how resources and claimers have undergone change over a period of time.

5. Providing information as to how an Organization is procuring and using various resources.

6. Providing information to various stakeholders regarding performance management of an Organization as to how diligently and ethically they are discharging their fiduciary duties and Responsibilities.

7. Providing information to the statutory auditors which in turn facilitates audit.

8. Enhancing social welfare by looking in to the interest of employees , trade union and government.