Question

Consider the following statements.

Statement 1 - "Financial statements are primarily directed towards the needs of owners"

Statement 2 - "Financial statements are primarily not directed towards the needs of owners"

Options

• Only statement 1 is correct.

• Only statement 2 is correct.

• Both the statement are correct

• None of these

Answer 1

Only statement 1 is correct.

Explanation:

Financial statements give those who are interested in the business the information they need regarding the management's performance and aid in making sound economic decisions. It should be emphasized that financial statements are an essential component of the annual reports of the corporations in question, which also comprise the directors' report, auditors' report, corporate governance report, and management discussion and analysis.