What Is the Primary Objective of Financial Reporting

question 115

Multiple Choice

What is the primary objective of financial reporting?

• A) to help investors make credit decisions
• B) to help management assess cash flows
• C) to protect users from fraudulent financial information
• D) to provide useful information for decision making

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Definitions:

Profit

The financial gain that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Borrow

To receive something, especially money, from a person or financial institution with the agreement to return it, typically with interest, at a future date.

Gross Domestic Product (GDP)

The nation’s expenditure on all the goods and services produced in the country during the year at market prices; represented by GDP.

Economics

The social science that studies the production, distribution, and consumption of goods and services, and how individuals, businesses, and governments make choices about allocating resources.