Custom Search


Monday, January 11, 2010

The Objective of Financial Statements

The main points rose here as follows
  • The objective of financial statements is to provide information about the financial position, performance and financial adaptability of an enterprise that is useful to a wide range of users for assessing the stewardship of management and for making economic decisions.
  • It is acknowledge that while all not all the information needs of users can be met by financial statements, there are needs that are common to all users. Financial statements that meet the needs of providers of risk capital to the enterprise will also meet most of the needs of other users that financial statements can satisfy.

Users of financial statements other than investors include the following.

  1. Employees
  2. Lenders
  3. Suppliers and other creditors
  4. Customers
  5. Government and their agencies
  6. The public

The limitations of financial statements are emphasized as well as the strengths.

All of the components of financial statements (balance sheet, profit and loss account, cash flow statement) are interrelated because they reflect different aspects of the same transactions.

The exposure draft emphases the ways financial statements provide information about the financial position of an enterprise. The main elements which affect the position of the company are:

  1. The economic resources it controls
  2. Its financial structure
  3. Its liquidity and solvency
  4. Its capacity to adapt to changes in the environment in which it operates (called financial adaptability)

The exposure draft discusses the importance of each of these elements and how they are disclosed in the financial statements.


Sometimes in life there are genuine

Shortcuts which can be life-changing
and in this case transform your wealth.

But even shortcuts require a level of
discipline and focus.

This opportunity is one such shortcut:

It requires setting aside a minimum of
23 minutes a day.

That might sound like nothing but
in my experience most people struggle
to go 23 minutes without checking their

I want you to promise me something.

Go to this private page right now and
decide if this is the kind of shortcut
that fits with your lifestyle and mindset:

The financial reward from this small
time investment could literally change
your life.

Please let me know how you get on.

Post a Comment

About Me

My Photo
Management Consultant.
Financial management and business management specialist.
View my complete profile


WELCOME ALL.....................................................,

If you have any problems regarding accounting please comment in this site and let we know SURELLY WE ANSWERED...................................,