The principal function of financial statements is to:

A) convey confidential information to the board of directors.
B) accurately project future cash flows of a company.
C) convey information to outside investors.
D) guarantee an accurate accounting record.

The primary function of financial statements is to convey information to external parties, including investors, creditors, and other stakeholders. This includes providing an accurate picture of the financial health and performance of the company, as well as informing investment decisions and assessing creditworthiness. Financial statements are not intended to convey confidential information to the board of directors, project future cash flows with certainty, or provide a guarantee of accurate accounting.