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Question
What are the limitations of financial statements?
Options
Prepared on the basis of going concern concept
Doesn't consider price level change
It's a study of interim report
All of the above
MCQ
Solution
All of the above.
Explanation:
Some limitations of financial analysis are:
- Financial analysis is just a study of interim reports.
- Financial analysis may be misleading without the knowledge of the changes in accounting procedure followed by a firm.
- Financial analysis does not consider price level changes.
- The financial statements are prepared on the basis of on going concerns basis.
- Monetary information alone is considered in financial analysis while non-monetary aspects are ignored.
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