Accounting - Topics - Understanding and using accounting information -
Limitations in the use of accounting information

Limitations in the use of accounting information

Problems in using historical information:

* the nature of the business may have changed

* the historical information may have been obtained from unreliable data

* the business may be in an industry which is changing

* the data may not reflect the state of the economy, either specific to
this industry or in general

* the quality of leadership may not be shown

* not all information may be available; for example, the intention to
introduce new technology

The qualities of good information include:

* comparability

* relevance

* reliability

* materiality

* understandability

The limits to providing this information result from timeliness and cost.

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