Purpose of Financial Reports

Purpose of Financial Reports

7. Financial reports are a structured representation of the financial position and financial performance of an entity. The objective of general purpose financial reports is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial reports also show the results of management’s stewardship of the resources entrusted to it. To meet this objective, financial reports provide information about an entity’s:

(a) assets;

(b) liabilities;

(c) equity;

(d) income and expenses, including gains and losses;

(e) other changes in equity; and

(f) cash flows.

This information, along with other information in the notes, assists users of financial reports in predicting the entity’s future cash flows and, in particular, their timing and certainty.