Tag Archives | Limitations

Limitations of Double Tax Treaties

In this article we will discuss about the limitations of double tax treaties. (i) The other Contracting State does not exercise its allocated rights to tax under a treaty, or (ii) A tax treaty gives the State the right to tax, but no tax is due under its domestic law. Only the domestic tax law […]

7 Major Limitations of Financial Reporting

The following points highlight the seven major limitations of financial reporting. 1. The objectives of financial reporting are affected not only by the environment in which financial reporting takes place but also by the characteristics and limitations of the kind of information that financial reporting, and particularly financial statements, can provide. The information is to […]

Limitations of Economic Income

In this article we will discuss about the limitations of economic income. Economic income has several difficulties. In fact there is no agreement as to the meaning of “better offness” that occurs in specific time periods. Also, this term is not well defined in case of business enterprises. The greatest problem lies in measuring the […]

Limitations of Working Capital Concept of Funds

In this article we will discuss about the limitations of working capital concept of funds. One of the limitations of working capital concept of funds is that it omits a few major financial and investment transactions. Important information regarding changes in the resources of the firm and in the financial structure of the firm are […]

5 Major Limitations of Accounting Ratios

The following points highlight the five major limitations of financial ratios. 1. Accounting ratios are based on accounting figures given in the financial statements. However, accounting figures are themselves subject to deficiencies, approximations, diversity in practice or even manipulation to some extent. Therefore, ratios are not very helpful in drawing reliable conclusions. 2. Accounting ratios […]

10 Major Limitations of Management Accounting

The following points highlight the ten major limitations of management accounting. The limitations are: 1. Based on Records 2. Lack of Knowledge and Understanding of the Related Subjects 3. Intuitive Decisions 4. Lack of Continuity and Coordination 5. No Substitute of Administration 6. Lack of Objectivity 7. Unquantifiable Variables 8. Costly 9. Not in Final […]

9 Major Limitations of Ratio Analysis

The following points highlight the nine major limitations of ratio analysis. The limitations are: 1. False Results if Based on Incorrect Accounting Data 2. No Idea of Probable Happenings in Future 3. Variation in Accounting Methods 4. Price Level Changes 5. Only One Method of Analysis 6. No Common Standards 7. Different Meanings Assigned to […]

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