Four main limitations of financial accounting
Answers
HERE IS YOUR ANSWER!!!!
The four main limitations of the financial accounting are as follow :-
1. Historical in nature
Financial accounting is essentially historical in nature.It records transaction and events which are already occurred.Although, the information is historically essential, it does not provide the management with day to day information for Evaluating operational efficiency.
2. Overall performance
Financial accounting discloses and reports profitability or otherwise of the business as a whole. since it does not classify accounts on the basic of department or segments, products, processes and sales territories, it fails to provide information about costs and profit of these
sub - division of the organisation.
3. Difficulty in price fixation
We know that the total cost of a product can be obtained only when we all expenses relating to a product had been incurred. That is why it is not possible to ascertain the price of the product in advance for the purpose of estimated the selling price. As the total cost is depends on many factors. so, all such factors cannot be supplied by the financial accounting.
4. Supply Quantitative Information
Financial accounting supplies quantitative information only through the absolute figures which do not present always the required information although they are needful to the users. But relative financial information are more important and informative.
Hope it helps you!!!!
so, please mark it as brainleast answer!!!!