P1 C1 Accounting and Its Terminology — Account STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceAccountP1 C1 Accounting and Its Terminology1 Mark
Question
Write the main limitations of accounting.
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Answer
Following are the main limitations of accounting. $(1)$ Non financial transactions are not considered though it is important. $(2)$ Stable value of money is the biggest limitation of accounting. $(3)$ In accounting, market value is avoided and transactions are recorded based on actual cost. $(4)$ In accounting, profit and loss A/c is prepared based on the current prices while Balance Sheet is prepared based on the historical values. This kind of dual standards are seen over here.
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