From the course: Accounting Foundations: Understanding the GAAP (Generally Accepted Accounting Principles)

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Objectives of financial reporting

Objectives of financial reporting

From the course: Accounting Foundations: Understanding the GAAP (Generally Accepted Accounting Principles)

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Objectives of financial reporting

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- Tell me, what do you think are the objectives of financial reporting? Let's explore that question. I'm imagining your answers, and I think I'm hearing most of you say, "To provide people with financial information about a business." You're right. Mostly. I would add the word useful to your response. And it would say, "To provide people with useful financial information about a business." One of the three primary objectives of financial reporting is to provide investors and creditors, whether present or perspective, as well as other users of financial information with accurate, reliable, and relevant financial information. Making investing or lending decisions would be so very difficult without useful financial information. If you wanted to invest in Amazon, you would wonder about a number of things like are they making money? Well, let's look at Amazon's income statement and see. Notice that 2020 results are shown…

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