Accounting provides information about the profitability and financial soundness of a concern. In addition, it provides various other valuable information also. However,accounting has certain limitations. Explain any three of such limitations.

Accounting provides information about the profitability and financial

1.	Accounting provides information about the profitability and financial soundness of a concern. In addition, it provides various other valuable information also. However,accounting has certain limitations. Explain any three of such limitations.
Answer» Limitaton of Accounting : 1. Transactions of non-monetary nature do not find place in accounting. Accounting is limited to monetary transactions only. It excludes qualitative elements like management reputation, employee morale, labour strike etc. 2. Cost concept is found in accounting. Price changes are not considered. Money value is bound to change often from time to time. This is a strong limitation of accounting. 3. Acceptable alternatives are so broad based that comparisons are likely to be confusing or misleading. For instance, inventory cost may be ascertained by LIFO or FIFO; or stock may be evaluated at cost price or market price.