Financial statements are designed primarily to:
A)Provide managers with detailed information tailored to the managers' specific information needs.
B)Provide people outside the business organization with information about the company's financial position and operating results.
C)Report to the Internal Revenue Service the company's taxable income.
D)Indicate to investors in a particular company the current market values of their investments.

Question

Quizplus · Accepted Answer

Financial statements are designed primarily to provide people outside the business organization with information about the company's financial position and operating results, such as investors, creditors, analysts, and regulatory agencies. While managers do use financial statements, they are not the primary audience for these reports. Financial statements are also used for tax purposes, but this is not their primary purpose. Additionally, financial statements do not indicate current market values of investments; instead, investors must use financial statements and other information to assess the value of their investments.

Financial Statements Are Designed Primarily To