Are all business transactions financial in nature?
Answers
Answer:
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Explanation: Mostly all of them are financial in nature.
A business transaction is an activity or event that can be measured in terms of money and which affects the financial position or operations of the business entity. A business transaction has an effect on any of the accounting elements – assets, liabilities, capital, income, and expense. A business transaction is a business activity involving the exchange of money and goods or services for money or for a right to collect money between accounting entities – person (natural and artificial) and which can be objectively measured.
Answer:
The study of accounting as a science, an art, and a language is continuously ongoing. It has changed significantly throughout time and is continually changing. It is necessary to research accounting's limits in order to comprehend it better.
Explanation:
Accounting's drawbacks:
Measurability:
- One of the accounting's primary flaws is that it cannot evaluate things or events that do not have a monetary value.
- No matter how important a component may be, if it cannot be expressed in monetary terms, accounting cannot take it into consideration.
- Several very important traits, such as management, loyalty, reputation, etc., are not well reflected in the balance sheet or the income statement.
No Further Evaluation:
- The financial statements show the firm's financial status as of the preparation date.
- Users of the statement are more interested in the company's long- and short-term prospects.
- However, accounting does not rely on any of these presumptions.
Costs from the past
- Accounting commonly uses past costs to measure values.
- This ignores crucial factors like inflation, price rises, etc.
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