Question

6. Give the main limitations of financial statements.

Answer 1

Answer:

• #1 – Historical Costs.
• #2 – Inflation Adjustments.
• #3 – Personal Judgments.
• #4 – Specific Time Period Reporting.
• #5 – Intangible Assets.
• #6 – Comparability.
• #7 – Fraudulent Practices.
• #8 – No Discussion on Non-Financial Issues.

Answer 2

Answer:

Financial Statements Are Derived from Historical Costs. ...

Financial Statements Are Not Adjusted for Inflation. ...

Financial Statements Do Not Contain Some Intangible Assets. ...

Financial Statements Only Cover a Specific Period of Time. ...

Financial Statements May Not Be Comparable

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