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Question

List any three objectives of financial statements.

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Solution

The objectives of preparing financial statements are:

1. A financial statement provides timely and reliable information on the economic status of a company on a periodical basis. It also makes information available to external users or stakeholders who do not have direct access to the information.

2. A financial statement helps in revealing the true financial position of a company. It contains information related to liquidity, profitability, financial viability and solvency of an organisation.

3. A financial statement is helpful in evaluating the earning capacity of a firm.


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