Question

Objective and limitations of accounting

Answer 1

However, it is not free from limitations.

The following are the main limitations of the new accounting system:

● It is mostly based on the cash system.

●No record is made relating to accrual transactions and hence,

●it cannot show the real financial situation of the government.

Answer 2

Hi there,

Thanks for asking.

Following is the answer to your question.

Objectives of Accounting

• Proper maintenance of business records.
• Keeping a check on profits/loss
• Cost evaluation and source of income
• Assessing the cost incurred and profit obtained on and from the business.
• Keeping track of the business finances.  
• Ensuring business control over the finances.

Limitations of Accounting

• Provides incomplete information
• Inability to provide exact information
• Figures maybe forged
• Fails to show the real financial position of the business.
• The assets and liabilities are shown in the balance.