Limitations of Accounting Standards
Accounting Standards have various limitations too. These are:
1. Lack of Flexibility: In accounting, there are many alternatives for valuations. It becomes very difficult to use different valuation methods to create reports, as a particular method can only be followed at a particular time instead of multiple methods, which may make the valuations lengthy and difficult.
2. Difficulty for Management: As stated, there may be many methods for a particular valuation, so it becomes difficult for management to choose one particular method, as each method has its own benefits and limitations.
3. Restricted Scope: Accounting Standards cannot override the statute and needs to be framed within the boundaries of the law that is prevalent at that time.
Accounting Standards : Need, Benefits, Limitations and Applicability
Accounting is a process of recording an organisation’s financial exchanges in order to retain data that can be referred to in the ,future to make important decisions. But it is very necessary that the records are maintained in a proper format and all the firms follow some specific rules to maintain the records for ease and to create uniformity in the format of records all over the country.
Table of Content
- What are Indian Accounting Standards?
- Need for Accounting Standards
- Benefits of Accounting Standards
- Limitations of Accounting Standards
- Applicability of Accounting Standards