Question

Define accounting and its limitations

Answer 1

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Limitations of financial statements. The following are all limitations of financial statements:

Dependence on historical costs. Transactions are initially recorded at their cost. This is a concern when reviewing the balance sheet, where the values of assets and liabilities may change over time.

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Answer 2

It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity. Accounting provides information on the.

A limiting condition; restrictive weakness; lack of capacity; inability or handicap: He knows his limitations as a writer. something that limits; a limit or bound; restriction: an arms limitation; a limitation on imports.