Question

What are the limitations of financial accounting?

Answer 1

LIMITATIONS OF FINANCIAL STATEMENTS

1. Dependence on historical costs. Transactions are initially recorded at their cost.
2. Inflationary effects.
3. Intangible assets not recorded.
4. Based on specific time period.
5. Not always comparable across companies.
6. Subject to fraud.
7. No discussion of non-financial issues.
8. Not verified.

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