What are limitations of financial statements?

Explanation

Limitation of monetary Statement:


The limitations of monetary statements area unit those factors that one ought to remember of before hoping on them to associate excessive extent. Having information of those factors may end up in a very reduction in investment funds in a very business, or actions taken to analyze additional. allow us to discuss them very well.



1. supported historical costs:


Financial statements don't disclose this price of the corporate. at the start we have a tendency to record transactions at their price. the worth of assets and liabilities changes over time.



Sometimes things, like marketable securities, we have a tendency to alter the number to match changes in their market values, however different things, like mounted assets, don't modification. Thus, the record {could be|might be|can be|may be|may we have a tendency toll be} dishonest if we gift an oversized a part of the number that is predicated on historical prices.



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