Explain The Goals And Objectives Of Users Of Financial Statements

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1.2 Goals and objectives of users of financial statements The main objective of financial reporting is to provide useful information to investors, creditors, and other interested parties. Financial reporting provides useful information about the firm's economic resources, claims against those resources, owners' equity, and changes in resources and claims. Perfectly, financial reporting provides company shareholders and other stakeholders like employees, communities, customers, and suppliers with information that aids in the prediction of the amounts, timing, and uncertainty of future cash flows. The main criteria for valid financial statements are that it should provide true and fair information that reflects the real condition and position of the firm, so that profits and revenue are not overstated and losses and expenses are not understated. Such kind of a fair statement would recognize the enterprise's financial strengths and weaknesses and review its liquidity and solvency. Financial statements should provide a reliable indication of a company's financial position, operating results, and changes in financial position. Also, statement components and categories should aid in decisions.…show more content…
Internal users are managerial accountants from inside the company, which include owners, managers and employees of the company. Internal managers receive financial and operating information for their businesses. Operating information is provided on both a weekly and a monthly basis. This information is not in the format of full-disclosure, financial statements prepared according to some strict accounting policies. This can be budget forecasts, or inventory turnover by months, any type of such information that is related to operations of the company. Owners of the company may use such operating information in order to control and monitor internal processes and well being of the

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