Question

1. define accounting? explain the limitations of accounting?​

Answer 1

Answer:

This information is just as vitally important when making business decisions based on the financial statements and accountancy of a company. The main limitations of accountancy and financial statements fall into the following categories: Accounting policies. Estimates. Professional judgement.

Answer 2

Answer:

Accounting

=> Accounting is an art of recording, classifying and summarising in a signicant manner and in terms of  money, transactions and events which are in part at least, of a nancial character and interpreting the  results there of.

=> A process of keeping financial record of bussiness.

Limitation of accounting

• It is not exact as it is based on different estimates made by different people.
• It ignores the price level changes and records all the items at historical value.
• It records only monetary transactions thus ignoring the important non-monetary transactions.
• It may make manipulations in the Balance Sheet.

• It omits qualitative information such as eciency and capability of management, quality of products  etc.

• It is based on rigid concepts and conventions.
• It may be inuenced by personal judgement.
• It requires knowledge of English language.
• It needs specic training, knowledge and skill to maintain the books of accounts.
• The layman cannot understand accounting system.