Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Financial Statements of a Company

Question:

What is one of the specific objectives of financial statements concerning investors and creditors?

Options:

To report the activities of the business affecting society

To disclose accounting policies

To provide information about cash flows

To judge the effectiveness of management

Correct Answer:

To provide information about cash flows

Explanation:

Financial statements aim to offer valuable information to investors and creditors, enabling them to make predictions, comparisons, and evaluations of potential cash flows. This information pertains to the amount, timing, and associated uncertainties related to cash inflows and outflows.