CA Foundation · Accounting · Theoretical Framework
Which of the following is an objective of accounting rather than a limitation of accounting?
Ascertaining the profit or loss for a period is an objective of accounting. The other options describe limitations: non-monetary items are left out, historical cost may not reflect current values, and estimates and judgements can influence reported figures.
- AAscertaining the profit or loss of the business for a periodCorrect
- BInability to record transactions that cannot be expressed in money
- CInformation based on historical cost may not show current values
- DFinancial statements are influenced by personal judgement and estimates
Explanation
Determining the profit or loss for a period is a key objective of accounting. The other three options are recognised limitations: non-monetary facts are ignored, historical cost can understate current values, and estimates involve personal judgement.
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