Limitations of financial accounting

A SHORT AND EFFECTIVE PRESENTATION ON LIMITATIONS OF FINANCIAL ACCOUNTING

1. DR.HARISINGH GOUR VISHWAVIDLAYA,SAGAR, MP (INDIA) (A Central University) DEPARTMENT OF COMMERCE Second MID Semester Exam’s Assignment PRINCIPLE OF COST ACCOUNTING (COM-CC-412) Submitted as per 75%of Syllabus B.Com . III rd sem SESSION 2017-18 Name of Student: RISHABH RAJAK Class : b.com Ii year Section: “E” Class Roll no.: y15180160 Enrollment no.: y15180160 Submitted By: Submitted to: MRS.PUSHPA MAM

2. LIMITATIONS OF FINANCIAL ACCOUNTING 1.HISTORICAL IN NATURE S hows net effect of transaction which has happened in past. Doesn’t help in future planning and managerial decisions. Failure to know the reason of low profitability position.

3. 2.DEALS WITH OVERALL PROFITABILITY S hows overall profitability only. Doesn’t show net profit per product, department or service. Difficult to know about activities within are not given profit.

4. 3.ABSENCE OF FULFILL DISCLOSURE Only those transactions are recorded which have monetory value. There are other factors of business which are not financial and non- monetory .

5. 4. CAN BE AFFECTED BY PERSONAL JUDGEMENT Method of calculating depreciation, rate of provision of doubtful debts and stock valuation method are decided by accountant.

6. 5 . DOESN’T REFLECT TRUE VALUE OF ASSESTS Value of assets is shown at the market price or the acquisition price . whichever is low. The actual worth may be more or less.

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