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User-Friendly Financial Statements: A Proposed Model, Kenneth Yale Rosenzweig, Andrew A. Fioriti
User-Friendly Financial Statements: A Proposed Model, Kenneth Yale Rosenzweig, Andrew A. Fioriti
Accounting Faculty Publications
In contrast to early bookkeeping systems whose only role was to assist the resident owners, financial reporting today serves to protect various nonresident parties with interests in the enterprise, such as absentee shareholders. It provides them with information useful for monitoring the operations of the enterprise and for making decisions concerning it.
The Financial Accounting Standards Board (FASB) formalized this concept of usefulness when it stated:
- Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. The information should be comprehensible to those who …