Abstract

A careful analysis of four documents related to the formulation of objectives of financial statements (reporting) reveals that they are dominated by the pure form of capitalism. Two documents (the Trueblood Committee’s Report and SFAC No.1) are constructed as normative theories based explicitly on the U.S. culture. The other two documents (the IASB’s CF and the IASB-FASB’s Joint CF) are not constructed in a theory form but implicitly based on the U.S. cultural background.  The first two documents are more particular and clear regarding the formulation of the objectives of financial statements (reporting) and supporting arguments (logic). On the other hand, the other two documents are general and vague. Their generality and vagueness are attributed to the unnamed belonging to the cultural background on which the objective of financial statements (reporting) is based. The reason for not declaring the belonging of the cultural background is the fear that the objective of financial statements (reporting) and standards based on them might face an outright rejection by the overwhelming majority of countries in the world.

Key words: Objectives, pure form of capitalism, earning power, cash wealth maximization, financial statements, financial reporting.