Objectives of financial statements, Accounting Basics

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OBJECTIVES OF FINANCIAL STATEMENTS

The fundamental purpose of financial statements according to AICPA is 'to offer qualitative financial information concerning to the business enterprise that is helpful to statement users, mainly owners and creditors in making economic choices. Apart from this, the other key objectives are :

1)    To offer information about the economic actions of the enterprise to several outer groups who or else have no access to such information.

2)    To offer useful information to investors and creditors in taking decisions concerning to investment and lending.

3)    To offer information to potential investors in estimateting the earning power of the enterprise.

4)    To offer economic information to the owners to moderator the management on its stewardship of the resources of the enterprise and the accomplishments of the corporate objectives.

5)    To offer information which allows the investors to evaluate the concert with like other undertakings and take suitable decisions regarding retention or disinvestments of their holdings.

6)    To offer information concerning accounting policies and contingent liabilities of the enterprise as these have a excepting in predicting, comparing and evaluating the earning power of the enterprise.


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