(i) Historical Records: Shareholders, investors and lenders, etc., are more interested in knowing the likely position of business enterprises in the future. The Financial Statements are not of much help as the information given in these statements is historical in nature.
(ii) Affected by Estimates: Financial Statements are the outcome of accounting concepts and conventions combined with estimates. Stock valuation, provision for depreciation, etc., are based on estimates. Therefore, financial statements are not free from bias.
(iii) Different Accounting Practices: The Financial Statements can be drawn up on the basis of different accounting practices. For example, depreciation can be provided either on straight-line basis or on written-down value basis. Profit earned or loss incurred will be different when different practices are followed.
(iv) Qualitative Elements are Ignored: Financial Statements portray the position in monetary terms. The profit or loss position or the financial position excludes things which cannot be expressed or recorded in monetary terms. Financial statements ignore the qualitative elements such as quality of management, quality of staff, public relations, etc.
(v) Price Level Changes are Ignored: Different assets are shown at historical cost. Financial Statements, therefore, ignore the price level changes or present value of the assets.
(vi) Cannot Meet the Purpose of all Parties: The number of parties interested in the Financial Statements are large and their interests vary. Financial Statements, therefore, cannot meet the purpose of all interested parties.

Join COC Education, We provided best video classes for CA/CMA/CS/Class 11th & 12th/

Contact us on- 9999631597, 8448322142, 7303445575

Visit YouTube Channel CA/CMA Santosh Kumar

Click Now for Demo Video

Join WhatsApp group for your domain course






Related Courses

Related Courses Latest Blogs

Who is The Best Faculty For Accounts?

You need the Best Faculty For Accounts, CA Exam Preparation, so that you can pass your exam with Flying Colors without wasting a single minute of your Precious Time. A Good Faculty will not only help you clear your exam but also help you achieve the highest rank Possible, which proves to be surely a great advantage in Job Placement after completing CA.

Best Video Lectures for Operations Management & Strategic Management (OMSM) CMA Inter Group-2

OMSM Operations Management and Strategic Management. Get your Video Lectures Operations Management and Strategic Management from COC Education

Top Reviews

Introduction to Statistics for CA Foundation

Introduction to Statistics for CA Foundation Business Mathematics, Logical Reasoning and Statistics is designed as per latest CA Foundation syllabus for Paper 3 to provide a firm grounding in the principles, techniques and practice. The book adopts self-study approach and has been written in student-friendly manner. With a blend of conceptual learning and problem-solving approach, it offers in-depth understanding of the basic mathematical and statistical tools. #introductiontostatistics

Chapter X of Companies Act 2013

Chapter X of Companies Act 2013 The company shall place the matter relating to such appointment for ratification by members at every annual general meeting. ... Under the Act, the provisions for rotation of auditors in the listed Company & certain other class of Companies, have been provided for. #chapterxofcompaniesact2013

Relevant sections under the Companies Act, 2013 dealing with fraud and false statements

Relevant sections under the Companies Act, 2013 dealing with fraud and false statements The new parent corporate law “The Companies Act 2013” is mostly ... I am limiting my write-up to the provisions to the Act, and I request the readers to refer relevant rules, if any, before ... in the 2013 Act is the Section 447 dealing with “Punishment for fraud”. ... Section 448

What is Corporate Image

What is Corporate Image A corporate identity or corporate image is the manner in which a corporation, firm or business enterprise presents itself to the public. The corporate identity is typically visualized by branding and with the use of trademarks, but it can also include things like product design, advertising, public relations etc #WhatisCorporateImage

What is Energy Audit

What is Energy Audit An energy audit is an inspection survey and an analysis of energy flows for energy conservation in a building. It may include a process or system to reduce the amount of energy input into the system without negatively affecting the output. #whatisenergyaudit