Financial statements are the documents that reflect the financial position of a business or an organization. They include the balance sheet, income statement, cash flow statement, and statement of changes in equity. These statements provide information about the assets and liabilities of a company expressed in monetary terms. However, there are certain items that financial statements do not consider, such as:

Assets and liabilities expressed in non-monetary terms

Financial statements do not consider those assets and liabilities that are not expressed in monetary terms. These include items such as goodwill, trademarks, patents, copyrights, and other intangible assets. Since these assets and liabilities are not expressed in monetary terms, they are not included in the financial statements.

Current market value

Financial statements do not consider the current market value of assets and liabilities. The value of an asset or liability may change over time due to market conditions, but financial statements only reflect the historical cost of the asset or liability. For example, the value of a piece of real estate may increase or decrease over time, but financial statements only reflect the original cost of the property.

Future events

Financial statements do not consider future events that may impact the financial position of a company. For example, a pending lawsuit or a change in government regulations may have a significant impact on the financial position of a company, but financial statements only reflect the current position of the company.

Non-financial information

Financial statements do not consider non-financial information that may be relevant to the financial position of a company. For example, information about the company's reputation, market share, or customer satisfaction may be important to investors, but this information is not included in financial statements.

Conclusion

In conclusion, financial statements provide information about the financial position of a company based on its assets and liabilities expressed in monetary terms. However, there are certain items that financial statements do not consider, such as assets and liabilities expressed in non-monetary terms, current market value, future events, and non-financial information. It is important for investors and analysts to consider these factors when evaluating the financial position of a company.