What is the primary objective of financial reporting?

Financial reporting is the crucial process of providing key information regarding the financial activities and performance of the business over a specified period, mostly on a quarterly or yearly basis.

The key financial reporting objectives are tracking cash flows, evaluating assets and liabilities, analyzing shareholder’s equity, and measuring profits.

There are three primary objectives of financial reporting. They are:

· Financial reporting helps the users of accounting information by providing information that is beneficial to them in making investment and credit-related decisions.

· It also helps the investors, creditors, and other users find the amount, timing, and uncertainty of future cash flows.

· Financial reporting also helps in knowing about the firm’s economic resources, claims, and changes in those claims to resources.