Objectives of Financial Statements
According to the Framework of International Accounting Standard, the objective of financial statements is to provide information about:
- financial position,
- financial performance, and
- changes in financial position of an enterprise.
The information contained in financial statements are useful to a wide range of users in making economic decisions.
Financial statements also show the results of the stewardship of management, or the accountability of management for the resources entrusted to it.
Information about financial position of an enterprise as at the end of the financial period is primarily provided in a balance sheet.
Information about financial performance of an enterprise during the financial period is primarily provided in an income statement or profit and loss account.
Changes in financial position
Information about the changes in financial position of an enterprise during the financial period is primarily provided in a separate statement.
Notes and supplementary schedules
The financial statements also contain notes and supplementary schedules and other information. For example, they may contain additional information about:
- the risks and uncertainties affecting the enterprise; and
- any resources and obligations not recognised in the balance sheet such as mineral resources.
Information about geographical and industry segments and the effect on the enterprise of changing prices may also be provided in the form of supplementary information.
- IASB. International Financial Reporting Standard