Answer
As per Statement of Financial Accounting Concepts number 1, "The Objectives of Financial Reporting by Business Enterprises," the primary purpose of financial reporting is to provide financial information to creditors, investors, governments and others-
1. That is useful in making rational credit and comparative choices. The data ought to be understandable to the individuals who have a justifiable understanding of economic and business activities and are willing to examine presented info with due diligence.
2. To aid present and potential creditors and investors as well as the other users in evaluating the sums, uncertainty and timing of prospective money receipts from dividends and proceeds from sales, maturity of securities, loans or redemption.
3. about the economic resources of an entity, the claims to those resources (commitments of the entity to exchange resources with other entities and proprietors' equity), and the impacts of exchanges, occasions, and conditions.
Work Step by Step
Aside from the main points above, financial reporting also facilitates the elements that show the current status of the economy. Such elements include the Gross Domestic Product (GDP) and Gross National Income (GNI).
