function limitation of bookkeeping
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Limitations of Accounting
It is well established that accounting, especially financial accounting is of absolute importance. Whether it is the management of the company or other external stakeholders, they depend on these financial statements for their dose of information about a firm’s financial transactions and position. However, accounting is not a perfect science yet. Let us take a look at some limitations of accounting.
Limitations of Accounting
There are some misconceptions about accounting. Like the fact that a Profit & Loss Statement shows the true profit or loss earned in a year, or that a balance sheet perfectly depicts the financial position of a firm.
Whereas the truth is that accounting is not a perfect science or art or language yet. It has been evolving for so many years and continues to evolve. The limitations of accounting must be studied to understand it better.