Writing Resources
A19 defined the objective of financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors lenders and other creditors in making decisions about providing resources to the entity The objective of financial reporting focuses on meeting the information needs of the primary user group The primary user group consists of people who have a claim or potentially may have a claim on an entity's resources its lenders and other creditors capital providers present and potential equity investors The decisions made by capital providers include whether and how to allocate their resources to a particular entity and how to enhance or protect their savings Capital providers assess an entity's ability to generate net cash inflows and management s stewardship when making these decisions Moreover they use information about an entity s resources claims to those resources and changes in resources and claims as inputs into the decision making process Kothari 2011 This essay will discuss the main objective of financial reporting and how the Conceptual Framework for Financial Reporting and Accounting Standards are facilitating the reporting of relevant and faithfully represented information in the entity's financial statements that is useful in assessing the prospects for future net cash inflows to the entity FASB narrows the focus of financial reporting into two different sub objectives information to help users in assessing the amount timing and uncertainty of prospective cash receipts and information about how management of an enterprise has discharged its stewardship responsibility to owners stockholders for the use of enterprise resources entrusted to it
