The major limitation of financial statements is
A) in their complexity.
B) in their lack of comparability.
C) in their use of historical cost accounting.
D) in their lack of detail.

Question

Quizplus · Accepted Answer

The use of historical cost accounting can limit the relevance of financial statements as it does not reflect current market values or inflation. This could lead to an over- or underestimation of an entity's assets, liabilities, and overall financial performance.

The Major Limitation of Financial Statements Is