The main objectives of preparing financial statements can be expressed as follows:
1. To Provide Information
Financial statements are prepared to provide exact financial information regarding profitability, solvency and financial strength of the firm.
2. To Know The Financial Position
Financial statements are prepared to determine the financial position of the business at the end of the accounting period.
3. To Facilitate Decision Making
Financial information and data provided by financial statements are used by management in decision making process.
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4. To Measure The Efficiency
These statements helps to measure operational efficiency and managerial efficiency of the company.
5. To Assist Forecasting
Financial statements helps the management in financial forecasting by providing relevant past data and financial information.
6. Communicating
Financial statements help to communicate with different users such as shareholders, creditors, bankers, government etc. about the financial situation of the firm.
