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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Objectives of Financial Reporting

The FASB has identified several objectives of financial reporting. These objectives proceed from the more general to the more specific and are intended to act as guidelines for providing accounting information in financial reports.

Required:

Starting with the most general objective, prepare a written report that identifies and briefly explains the objectives of financial reporting.

To determine

Identify and explain the objectives of financial reporting.

Explanation

Financial reporting:

Financial reporting is the procedure used to communicate the information obtained from financial statements prepared for a company. It is essential to disclose the data to various stakeholders of the company, as various decisions need to be taken by the stakeholders.

The main objective of financial reporting is to provide the financial data pertaining to a company which is used by:

Creditors:

The financial data provided in the financial reports are used by the creditors to make decisions whether or not and how much to lend to the company.

Financial institutions:

The financial data provided in the financial reports are used by the financial institutions to make lending and investing decisions related to the company...

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