In relation to limitations of financial accounting, which of the following statements is INCORRECT?
Financial accounting discloses the present value of the business.
The correct answer is option 1. Financial accounting does not disclose the present value of the business. It records historical data, including past transactions and the financial position at a particular point in time. The other statements are true, as financial accounting allows some flexibility in accounting treatments, is influenced by personal judgments (especially when estimation is required), and may not capture non-monetary information such as employee morale or brand value.
Similar Questions
________ is historical in nature and reflects the past position of business organization.
Which one of the following is a limitation of Financial Accounting?
Ind AS 1 requires financial statements to comprise of SOCIE, a concept which was not there under Indian GAAP. SOCIE refers to ________.
Important Questions from Financial Statement Analysis
The information with respect to a company is:
EBIT = Rs. 35 lakhs
15% Term loan = Rs. 50 lakhs
Working capital term loan from bank @ 20% = Rs. 30 lakhs
10% Preference share capital = Rs. 10 lakhs
Public deposits accepted @ 14% = Rs. 15 lakhs
Which one among the following is the Interest Coverage Ratio for the company?
Which technique(s) can be used in connection with analysis and interpretation of financial statements?
1. Funds Flow Statement
2. Net Working Capital Analysis
3. Cash Flow Statement
4. Ratio Analysis
________ is historical in nature and reflects the past position of business organization.
Which one of the following is a limitation of Financial Accounting?
- The common size statements are useful, both, in intra-firm comparisons over different years and also in making inter-
firm comparisons for several years. This analysis is also known as
