DECA+ Business Management and Administration Practice Exam 2025 - Free Business Management Practice Questions and Study Guide

The main purpose of financial statements is to provide an overview of an organization's financial performance. These statements, including the balance sheet, income statement, and cash flow statement, offer a detailed snapshot of a company's financial health at a specific point in time or over a specific period. They help stakeholders, including investors, creditors, and management, assess profitability, liquidity, and overall financial stability.

By presenting data on revenue, expenses, assets, liabilities, and equity, financial statements enable stakeholders to make informed decisions regarding investments, lending, and operational management. They are essential tools for transparency and communication within the business environment, serving as vital records for internal planning as well as external evaluation.

Other options suggest alternative purposes that, while relevant in certain contexts, do not align with the primary function of financial statements. For example, predictions about market trends and future plans may rely on financial data and analysis, but they are not the direct purpose of the financial statements themselves. Similarly, while financial information can certainly assist in marketing strategies, that is not its fundamental role.