Chapter 1 of the ‘Statement of Principles’ outlines two rationales for financial accounting, namely decision making and stewardship. It suggests that accounting is done to help users make decisions (decision making) and to confirm what has happened (stewardship). Which of these two purposes do you consider to be the more important? Give reasons for your answer.

Your answer should be in the form of a short essay, of about 300 to 500 words, or at least in the form of comprehensive notes for such an essay. There is no single right answer, nor will you find the answer by looking it up in this chapter. You will have to apply the ideas and facts introduced in this chapter to formulate your own answer — indeed, requiring you to work through the issues like this is the point of this self-check question. Our answer is at the back of the book, and is based on Chapter 1 of the ‘Statement of Principles’, and lists the main points that you should have covered.