Despite all of the GAAP and Conceptual framework there are still limitations to the financial statements and the information that is presented in them. This means that the information is not as perfect or as complete as some users would like. Some of these limitations are :
- the financial statement only record monetary items and therefore do not take into account such items as brand loyalty and goodwill .
- some of the information involves various degrees of judgment and estimation .
- financial statement reflect only transaction that have occurred (post transaction )
and do not give any recognition to future plans or events .
- Only the transactions of one company are reported . This may be limiting when the actions and events of a competitor greatly impact the future of the company .
Tuesday, April 14, 2009
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