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Identify the limitations of financial statements:
A. Can be biased
B. Report on stewardship function
C. Aggregate information
D. Only interim reports
E. Basis of fiscal policies
B. Report on stewardship function
C. Aggregate information
D. Only interim reports
E. Basis of fiscal policies
Choose the correct answer from the options given below:
- a)A, C, B only
- b)A, C, D only
- c)E, A, D only
- d)B, A, C only
Correct answer is option 'B'. Can you explain this answer?
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Identify the limitations of financial statements:A. Can be biasedB. Re...
Limitations of Financial Statements:
Financial statements have several limitations that can affect their usefulness and accuracy. The correct answer, option 'B', correctly identifies some of these limitations. Let's delve into each of these limitations in detail:
Can be biased:
Financial statements can be biased due to management's influence on the preparation of the statements. Management may have incentives to present the company's financial position in a more favorable light, leading to potential biases in reporting.
Aggregate information:
Financial statements provide aggregated information about a company's financial performance and position. As a result, detailed insights into specific transactions or events may be lacking, which can limit the usefulness of the statements for decision-making.
Only interim reports:
Financial statements are typically prepared periodically (e.g., quarterly or annually) and may not capture real-time information about a company's financial status. This limitation can impact the timeliness of decision-making based on financial statement data.
Overall, understanding the limitations of financial statements is crucial for users to interpret the information accurately and make informed decisions about a company's financial health.
Financial statements have several limitations that can affect their usefulness and accuracy. The correct answer, option 'B', correctly identifies some of these limitations. Let's delve into each of these limitations in detail:
Can be biased:
Financial statements can be biased due to management's influence on the preparation of the statements. Management may have incentives to present the company's financial position in a more favorable light, leading to potential biases in reporting.
Aggregate information:
Financial statements provide aggregated information about a company's financial performance and position. As a result, detailed insights into specific transactions or events may be lacking, which can limit the usefulness of the statements for decision-making.
Only interim reports:
Financial statements are typically prepared periodically (e.g., quarterly or annually) and may not capture real-time information about a company's financial status. This limitation can impact the timeliness of decision-making based on financial statement data.
Overall, understanding the limitations of financial statements is crucial for users to interpret the information accurately and make informed decisions about a company's financial health.
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Identify the limitations of financial statements:A. Can be biasedB. Re...
A, C, D are the limitations
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Identify the limitations of financial statements:A. Can be biasedB. Report on stewardship functionC. Aggregate informationD. Only interim reportsE. Basis of fiscal policiesChoose the correct answer from the options given below:a)A, C, B onlyb)A, C, D onlyc)E, A, D onlyd)B, A, C onlyCorrect answer is option 'B'. Can you explain this answer?
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