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Question
Which of the following is not the limitation of financial statements?
Options
Not free from personal bias.
Ignores qualitative elements.
Ignores price level changes.
None of these.
MCQ
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Solution
None of these.
Explanation:
Financial statements are prepared using historical costs, record only monetary transactions, and involve subjective estimates by management. Therefore, being affected by personal bias, ignoring qualitative factors, and ignoring inflation are all inherent limitations of financial statements.
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