Limitations of Financial Statements Flashcards
1
Q
Historical Nature
A
Information on past performance but not insight into current state
2
Q
Use of Estimates
A
Rely on estimates and assumptions that can affect reliability and accuracy
3
Q
Limited Scope
A
Do not provide information on non-financial factors such as customer satisfaction, employee morale
4
Q
Inflation
A
May not reflect the effects of inflation on a company’s financial position
