Question
What are the objectives of preparing financial statements?
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Answer
The main purpose of preparing financial statements is to:
- Provide information about the financial status and financial position of the organization (or other entities).
- Provide information to analyze and assess the economic and business performance of the organization (or other entities).
- Serve as an accounting database for future references.
- Facilitate effective, accurate and well-thought-out policies and strategies for the organization (or other economic entities).
- Serve as an important tool to promote effective decision making.
- Act as an important source of crucial business information.
- Ascertain the results of various business operations such as income, expenditure, debtors, payables, receivables, profits, losses, etc.
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