Question

what do you mean by accounting? give any two limitations of accounting

Answer 1

accounting is a systematic process of identifying measuring recording classifying summarizing interpreting and communicating financial information.
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Answer 2

Accounting is the process of identifying, measuring,and communicating economic information to permit informed judgements and decisions by users of the information.

- Definition of Accounting: American Accounting Association.

Limitations of Accounting

1. Records Only Monetary Transactions

2. Effect of price level changes are not considered.

3.No realistic information

4.Personal bias of Accountant affects the accounting statements

5.Permits alternative treatments.

6.Profit no real test of managerial performance

7.Historical in nature

8.Window dressing in balance sheet.