According to proprietary theory, what is considered central to financial reporting?

The proprietary theory of accounting emphasizes that the financial statements of a business primarily serve to report information to the owners of the business. This theory posits that since the owners are the primary stakeholders and have a vested interest in the financial success of the entity, the financial reporting should focus on their interests.

In this context, the company's financial performance, resources, and obligations are all viewed primarily from the perspective of how they affect the owners' investment and returns. This means that the financial statements are designed to inform owners about the entity's profitability, liquidity, and overall financial health, allowing them to make informed decisions regarding their investments.

The other choices represent different perspectives or areas of focus in financial reporting but do not align with the proprietary theory's core principle. For example, while the company's obligations may be important for creditors or other stakeholders, they are not the primary focus under the proprietary view. Similarly, employee performance is relevant for operational management and decision-making but does not directly relate to the owners' interests. Lastly, government regulations govern how financial reporting is conducted but do not dictate the central focus of financial reporting as outlined in the proprietary theory.