CBSE Class 11-commerce Answered

 Limitations of accounting are as follows:

1. Accounting information is not fully correct: Transactions are recorded in the books of account on the basis of source of documents such as sale or purchase or receipt of cash. But still some are also made available for ascertaining profit or loss.
2. Accounting information ignores the qualitative elements: As accounting statements are confined to monetary values only, qualitative elements are ignored.
3. Accounting information ignores the effect of price level changes: Accounting statements are prepared at historical cost. The changes in the value of money are not considered while preparing financial statements. Unless price level changes are considered, accounting information will not present the original financial results.