Question

Accounting records business transactions and events which are of financial nature. Do you consider limitation of Accounting?​

Answer 1

Answer:

Accounting records business transactions and events which are of financial nature. Do you consider it a limitation of accounting ? ... Yes, It is limitaion of accounting because there are events which have a vital bearing on the profitability of the firm and such events are ignored.

Answer 2

Accounting is still a work in progress as a science, art, and language. It has been changing for a very long time and is still changing. For a deeper understanding of accounting, its limitations must be studied.

Accounting's drawbacks:

Measurability:

• The inability of accounting to assess objects or occurrences without a monetary value is one of its main drawbacks.
• No matter how significant a factor may be, accounting cannot include it if it cannot be stated in monetary terms.
• The balance sheet or the income statement do not adequately reflect several extremely significant characteristics, such as management, loyalty, reputation, etc.

No Further Evaluation:

• The firm's financial situation as of the date of preparation is depicted in the financial statements.
• The long- and short-term prospects of the company are of more relevance to the statement's users.
• Accounting, however, does not make any such assumptions.

Costs from the past

• Accounting frequently measures values using historical expenses.
• This overlooks important considerations like inflation, pricing increases, etc.

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