Which of the following is the objective of preparing financial statem…

Option 1-To provide information about economic resources and obligations of a business.
Option 1-To provide information about the earning capacity of the business.
Option 1-To provide information about cash flows.
Correct option is all of these.

The specific objectives include the following:
1. To provide information about economic resources and obligations of a business: They are prepared to provide adequate, reliable and periodical information about economic resources and obligations of a business firm to investors and other external parties who have limited authority, ability or resources to obtain information.
2. To provide information about the earning capacity of the business: They are to provide useful financial information which can gainfully be utilised to predict, compare and evaluate the business firm’s earning capacity.
3. To provide information about cash flows: They are to provide information useful to investors and creditors for predicting, comparing and evaluating, potential cash flows in terms of amount, timing and related uncertainties.