Class 12th Accountancy 2017 Set2 Delhi Board Paper Solution
State any four limitation of analysis of financial statements.
Following are the limitation of analysis of financial statements:
(i) It ignores price level changes as a change in price level makes analysis of financial statements of different accounting years invalid.
(ii) It suffers from the limitations of financial statements as the analysis is based on the information given in the financial statements.
(iii) It ignores qualitative and non monetary aspect as the quality of management, quality of staff etc. are ignored while carrying out the analysis of financial statements.
(iv) It is not free from bias of accountants such as method of inventory valuation , method of depreciation etc.
(v) It may lead to window dressing i.e. showing a better financial position than what actually is by manipulating the books of accounts.
(vi) It may be misleading without the knowledge of the changes in accounting procedure by a firm.
Popular Questions of Class 12th accountancy
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What is Capital Fund? How is it calculated?
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What is sacrificing ratio? Why is it calculated?
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If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
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Why there is need for the revaluation of assets and liabilities on the admission of a partner?
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What is subscription? How is it calculated?
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List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
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Why is Profit and Loss Adjustment Account prepared? Explain.
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If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
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Why it is considered desirable to make the partnership agreement in writing.
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On what occasions sacrificing ratio is used?
Recently Viewed Questions of Class 12th accountancy
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State the order of settlement of accounts on dissolution.
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State the accounting treatment at the time of dissolution of a firm for:
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Define Partnership Deed.
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Identify various matters that need adjustments at the time of admission of a new partner.
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What is subscription? How is it calculated?