Research the web and briefly discuss the limitations of financial accounting information
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1. lack of qualitative analysis
financial statement records only those events and transactions which can be expressed in terms of money . qualitative aspects of business are omitted from the books at all as these can't be expressed in monetary terms.
2. Affected by window dressing
some firms resort to window dressing their financial statements to cover up bad financial position on the eve of accounting date.
3. difficult in forecasting
financial statements are record of past events and historical facts. it is the fast changing and modern business, the analysis of past information may not be must use in future forecasting.
4. doesn't reflect change in price level
figures given in financial statements don't show the effect of changes in price level . as such, the comparison of past year figures with current year figures may lead to misleading conclusions.
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