ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which statement best describes the objective of general purpose financial reporting under the Conceptual Framework?
The objective is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors when deciding whether to provide resources to it. It is not designed to show market value, compute tax or meet individual requests.
- ATo provide information about the reporting entity that is useful to primary users in making decisions about providing resources to the entityCorrect
- BTo show the market value of the entity so that investors can value its shares
- CTo provide the tax authority with the information needed to calculate taxable profit
- DTo meet the specific information requests of each individual stakeholder group
Explanation
The objective is to give financial information useful to investors, lenders and creditors for decisions on providing resources. The reports do not aim to show the entity's market value, and they are not prepared for tax computation or individual requests, so the other options are wrong.
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