Question

What Are the Four Limitations of Financial Statements?

Answer 1

The following are the limitations of the financial statements:

1. Financial statements are derived from historical costs.
2. Financial statements are not adjusted for inflation.
3. Financial statements only cover for a specific period of time.
4. Financial statements do not record some intangible assets as assets
5. Financial statements are not comparable.

Also read:

• Financial Statements of a Company
• Analysis of Financial Statements
• Financial Statements MCQs
• Uses and Importance of Financial Statements

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