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ACCA Applied Knowledge · Financial Accounting · Key principles and concepts of accounting

Which statement best describes the main purpose of general purpose financial statements under IFRS?

General purpose financial statements aim to give information on an entity's financial position, performance and changes in financial position that is useful to a wide range of users making economic decisions. They are not designed to show market value, compute tax or support internal costing.

  1. ATo provide information about financial position, performance and changes in financial position that is useful in economic decisionsCorrect
  2. BTo show the current market value of the entity to potential buyers
  3. CTo calculate the taxable profit payable to the tax authorities
  4. DTo give management detailed cost data for budgeting and control

Explanation

The objective is to provide financial information about the reporting entity useful to users in making decisions about providing resources to it. Statements are not designed to show market value, compute tax or serve internal budgeting, which rely on other information.

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