ACCA Financial Reporting (F7) Practice Exam 2026 – Complete Prep Guide

The main purpose of financial statements is to offer a summary of the financial performance and position of an entity. Financial statements, including the income statement, balance sheet, and cash flow statement, provide key insights into an organization’s profitability, liquidity, solvency, and overall financial health at a specific point in time. They serve as a crucial tool for stakeholders, including investors, creditors, and analysts, to assess the performance of the entity over a period and to make informed decisions regarding resource allocation, investment, and financial planning.

This summary encapsulates essential financial metrics that reflect how well the entity is doing in terms of revenue generation, cost management, and asset utilization. Stakeholders rely heavily on this consolidated information to form their perspectives—not only on past performance but also on future prospects. Thus, the emphasis of financial statements is fundamentally on presenting a clear, cohesive view of the organization's financial standing.

While providing tax information, assisting management with operational decisions, and communicating future strategies are certainly important aspects of financial reporting and business operations, they do not capture the primary objective of financial statements, which is to deliver a precise overview of financial data to help stakeholders evaluate performance and position.