Objective of Financial Statements

The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful in a wide range of users in making economic decisions.


Financial statements also show the results of the management's stewardship of the resources entrusted to them. To meet this objective, financial statements provide information about the following:

1. Assets,
2. Liabilities,
3. Equity,
4. Income and expenses, including gains and losses,
5. Contributions by and distributions to owners in their capacity as owners,
6. Cash Flows

Such information, along with other information in the notes would assist users of financial statements in predicting the entity's cash flows and in particular their timing and certainty.

However, financial statements do not provide all the information that users may need to make economic decisions since they largely portray the financial effects of past events and do not necessarily provide non-financial statements.