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GAAP - Major Objectives of Financial Reporting

What are the major objectives of financial reporting?

Who are the users of financial reporting?

What type of information will each user group need? Why?

What is the purpose of Generally Accepted Accounting Principles (GAAP) and the accounting cycle?

Is it possible to deviate from GAAP and the accounting cycle and still prepare financial statements? Why or why not?

What are some possible consequences of this course of action?

What organizations are responsible for governing financial reporting?

What are their roles?

How have the roles changed in the last 20 years?

How might their roles change in the next 20 years?

Solution Preview

GAAP
What are the major objectives of financial reporting?
Who are the users of financial reporting?
What type of information will each user group need? Why?
(200 words)
The major objectives of financial reporting are to present in a uniform way - important and relevant information to users for them to use to make proper decisions. Financial reports should help assist in the assessment of amounts, timeframes, and cash flows. These reports will also show any legal claims, resources owned, equity in the business, and any fluctuations in those resources and claims. From these reports, a clear picture of the organization's performance during certain periods of time should be evident (Objectives of Financial Reporting, 2007).
The users of this financial reporting are external and internal users. "External users include shareholders, lenders, consumer groups, external auditors, customers, and government agencies; internal users are managers, internal auditors, sales staff, budget officers, controllers, officers, and directors (Allano, 2009)."
According to T. Allano (2009), each users group would see the following information:
1) External users get limited information - simply general financial statements. These would show the economic status and are more like public information that is posted on the Internet.
2) Those who have an interest in the organization would receive these statements.
3) Government agencies receive the statements to make sure the correct tax amounts are paid.
4) Lenders are ...

Solution Summary

GAAP major objectives of financial reporting are examined.

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