Limitations of Profit and Loss Statement and Balance Sheet

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Added on 2022/12/15

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This document discusses the limitations of the profit and loss statement and balance sheet in financial accounting. It highlights the drawbacks and challenges in presenting accurate financial information. The profit and loss statement follows the accrual form of accounting, which may not reflect the actual cash flow. The balance sheet may not accurately value certain assets and may not represent the true financial situation of the company. Accounting standards and the matching concept also pose limitations. Overall, understanding these limitations is crucial for interpreting financial statements effectively.

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Limitations of Profit and Loss Statement and Balance Sheet

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