To be useful for decision making,financial reporting must enable the user to assess cash flow prospects and assess management's stewardship.

Question

Quizplus · Accepted Answer

Financial reporting is designed to provide information that is useful for decision-making. To achieve this objective, financial reporting must enable the user to assess cash flow prospects and assess management's stewardship. Financial reporting should provide information about an entity's economic resources and claims on those resources, as well as the changes in those resources and claims, which allows users to assess an entity's cash flow prospects. Additionally, financial reporting should provide information about management's actions and the results of those actions, which enables users to assess management's stewardship.

To Be Useful for Decision Making,financial Reporting Must Enable the User