objectives of financial statements

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The purposes for which the financial statements in the annual accounts and report have been made. It is essential to identify these purposes to determine (a) what information should be provided and (b) how it should be presented. The current thinking is that the objective is to provide information useful in economic decision making (see Trueblood Report). It is debatable how far present disclosures are appropriate for this purpose; there is some uncertainty as to the users of financial statements, the purposes they use them for, and how they process the information. In the UK the Accounting Standards Board’s Statement of Principles attempted to address these issues but has been much criticized. The International Accounting Standards Board’s Framework for the Preparation and Presentation of Financial Statements also addresses the objectives of financial reporting. See also qualitative characteristics of accounting information.

Subjects: Accounting.

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