Describe at least four major limitations of financial statement information. Please add detailed information..© BrainMass Inc. brainmass.com October 2, 2020, 5:13 am ad1c9bdddf
One of the main limitations of financial statements is that it oftentimes does not present the entire scope of the company. While the financial statements may reflect poor earnings (or high earnings), that is only what the numbers reflect. The numbers and other data used to compile the financial statements are based upon the accounting transactions. The managerial accounting information, which includes non-financial data, is not part of the financial statement. Therefore, financial statements really only show one side of the company. A company with low earnings may have other information that supports continued future growth, ...
This solution discusses major financial statement limitations.