Which of the following is a limitation of financial statements?
Which of the following is a limitation of financial statements?
The correct option is D All of the above
Financial Statements
are the collective name given to Income Statement and Positional Statement of
an enterprise which show the financial position of business concern in an
organised manner.
Some of limitations of
financial statements are as follows
Accounting information
is sometimes based on estimates which may be unrealistic.
Window dressing may
lead to faulty results. Window dressing means manipulation of accounts and Show
easy picture of financial statements
Accounting ignores the
effect of price level changes. Transactions recorded on historical cost. Examples, fixed assets recorded at historical cost.
Accounting information
can be manipulated and thus cannot be considered as the true test of
performance.
Accounting information
may be Biased accounting information is not without personal influences or
bias of accountant.
Financial Statements are the collective name given to Income Statement and Positional Statement of an enterprise which show the financial position of business concern in an organised manner.
Some of limitations of financial statements are as follows
Accounting information is sometimes based on estimates which may be unrealistic.
Window dressing may lead to faulty results. Window dressing means manipulation of accounts and Show easy picture of financial statements
Accounting ignores the effect of price level changes. Transactions recorded on historical cost. Examples, fixed assets recorded at historical cost.
Accounting information can be manipulated and thus cannot be considered as the true test of performance.
Accounting information may be Biased accounting information is not without personal influences or bias of accountant.
