Which of the following is the primary objective of financial statements?
A) Providing managers with detailed information tailored to the managers' specific information needs.
B) Providing users outside the business organization with information about the company's financial position and operating results.
C) Reporting to the Internal Revenue Service the company's taxable income.
D) Indicating to investors in a particular company the current market values of their investments.

Question

Quizplus · Accepted Answer

The primary objective of financial statements is to provide information to users outside of the business organization about the company's financial position and operating results. This includes investors, creditors, suppliers, government agencies, and other interested parties who need reliable and relevant information to make decisions about their relationship with the company. While financial statements may also be used by managers, this is not the primary objective. Reporting taxable income to the IRS is a requirement but not the main objective of financial statements. Indicating current market values of investments is not a primary objective of financial statements but rather a secondary effect of disclosing financial information that investors may use to calculate their own assessments of market value.

Which of the Following Is the Primary Objective of Financial