Home › UP Board Class 12 › accountancy › Financial Statements of a Company › A key limitation of financial statements is that…
A key limitation of financial statements is that they are generally based on:
Arandom estimates with no records
Bfuture market prices only
Chistorical cost and ignore many qualitative factors
Demployees' personal opinions
Answer & Solution
Correct answer: C. historical cost and ignore many qualitative factors
They rely on historical cost and omit qualitative factors — a key limitation.
Related questions
In a company's Balance Sheet, the total of the 'Equity and Liabilities' side must equal thFinancial statements are prepared mainly to help ___ make economic decisions:The statement that shows the revenue earned and expenses incurred to arrive at profit or lInventories and trade receivables of a company are examples of:Trade payables (creditors) of a company are an example of:Plant, machinery and buildings of a company are classified as:Reserves and surplus of a company are shown under the head:Obligations that are due to be paid within twelve months are classified as: