What is the primary goal of financial reporting?

The primary goal of financial reporting is to provide information useful for making economic decisions. This encompasses offering insights into a company's financial position, performance, and cash flows, which are pivotal for stakeholders such as investors, creditors, and management. These users rely on accurate and comprehensive financial statements to assess the past and forecast future performance, enabling them to make informed decisions about resource allocation, investment, or lending.

Financial reporting aims to reflect the economic reality of a company, thus serving the needs of various stakeholders who depend on this information to minimize risks and maximize returns. By presenting clear and relevant financial data, it facilitates transparency and accountability in business operations.

The other options, while related to financial activities, do not encapsulate the main aim of financial reporting. Preparing tax returns pertains specifically to compliance with tax regulations but does not directly address the needs of economic decision-making. Preventing financial fraud is a critical aspect of internal controls and governance but not the primary purpose of reporting itself. Ensuring compliance with international laws is important for multinational corporations, yet it is not the central goal of financial reporting, which focuses on providing actionable financial insights to stakeholders rather than on legal compliance.