general purpose financial statements

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The annual accounts and report prepared by companies; they are intended to serve the needs of many users and are therefore regarded as general purpose documents. Specific purpose statements are sometimes prepared to meet the needs of a particular group of users. However, as many annual report and accounts are over 80 pages in length it would not be practical to extend them further in an attempt to meet more closely the needs of the special groups of users. Therefore general purpose financial statements are often regarded as compromise documents designed to satisfy to a large extent the information needs of a number of different groups. Recent changes in legislation and the increasing complexity of accounting standards have resulted in statements that are likely to be understood only by the financially sophisticated. In the USA the usual term is all-purpose financialstatements. See also information overload; simplified financial Statements; understandability.

Subjects: Accounting.

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