Q.5 What are the Objectives of Financial Statements ? वित्तीय विवरण के उद्देश्य क्या हैं?
Ans:
The main objective of these statements is to present a true and fair view of the financial and operational
performance and the position of cash flows of an organization for different users, who may be able to take correct
financial decisions. These statements are vital source of information for the users; these statements help the users to
take proper decisions. The objectives of financial Statements are as under:-
1. To make available such financial data, which are related to financial position of the firm.
2. To reveal operating profits of the firm, which shows effect on its financial position.
3. To provide necessary information for the users of financial statements.
4. To present true and fair picture of the business.
5. To present basis for future activities of the firm.
| Source : RBSE 12th Class: Chapter 10 : page Number: 330 |
| Keywords: financial position ,operating profits,information, fair picture , future activities |
| Extra Info : Nature of Financial Statements The information of the financial statements is the end result of the following combinations:- 1. Recording business transactions on the basis of authentic evidence or all recorded information is based on evidences. 2. Financial Statements are prepared on the basis of accounting conventions. For examples, due to the convention of conservatism, provision is made in the books for expected future losses, but expected future profits are ignored. On account of this, financial statements become believable and understandable. As such operating results become more authentic. 3. Financial Statements are prepared following accounting conventions. For example, according to the going concern concept, accounts are kept on the assumption that the business will be carried on continuously. On account of this financial statements become more reliable, understandable and comparable. 4. Financial Statements are also affected by personal Judgment. For example, which method of valuation of stock should be followed, this decision will be personal decision of the Management, which affects the financial statements. Thus, personal judgment also plays a vital role in preparing Financial Statements. 5. Financial Statements are important source of financial information, on the basis of which conclusions are drawn about the profitability and financial position of an organization. |