The Financial Accounting Standards Board, in its Statements of Financial Accounting Concepts, asserted that financial reporting includes not only financial statements but also other means of communicating information that relates, directly or indirectly, to the information provided by the accounting system. Financial reporting is the process of communicating financial accounting information about an enterprise to its external users. Financial statements provide information useful in investment and credit decisions and in assessing cash flow prospects. They provide information about an enterprise's resources, claims to those resources, and changes in the resources.

Financial reporting is a broad concept encompassing financial statements, notes to financial statements and parenthetical 'disclosures, supplementary information (such as changing prices), and other means of financial reporting (such as management discussions and analysis, and letters to stockholders). Financial reporting is but one source of information needed by those who make economic decisions about business enterprises.

Financial reporting focuses primarily on providing information about assets, liabilities, sales, and earnings. Information about earnings based on accrual accounting usually provides a better indication of an enterprise's present and continuing ability to generate positive cash flows than that provided by cash receipts and payments. Accrual accounting is an accounting method that reports sales and expenses when they occur, instead of when the actual cash transactions to take place.