What are the financial reporting objectives for a NFP or government entity?
The overall objective of financial reporting of nonbusiness organizations is to provide financial statement readers with the following:
1) Information useful in making resource allocation decisions – Financial reporting by nonbusiness organizations should provide lenders and those making financial decisions based on the statements with available information in order to come to a decision as to whether they should allocate resources to the organization.
2) Information useful in assessing services and ability to provide services – Financial reporting should provide appropriate information to assist in presenting prospective resource providers with an understanding as to whether that organization can currently provide and will be able to continue providing services into the future.
3) Information useful in assessing management stewardship and performance – Financial reporting should provide information that is useful to users in determining if and how managers of a nonbusiness organization have discharged their stewardship responsibilities.
4) Information about economic resources, obligations, net resources, and changes in them – Financial reporting should provide information about the economic resources, obligations, and net resources of an organization.
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