Question

Which of the following is a limitation of accounting?

• A. Less scope for fraud and theft
• B. Does not record all events
• C. Documentary evidence
• D. Provides control over assets

Hint:

Accounting records only measurable financial transactions, not qualitative factors like employee morale.

Answer 1

The Correct Option is B

Step 1: Understanding limitations of accounting.
Accounting records only financial transactions and ignores qualitative or non-monetary events.

Step 2: Evaluating options.

• (A): Advantage, not limitation.
• (B): Correct. Accounting does not record all events.
• (C): Advantage, provides proof.
• (D): Advantage, ensures control.

Step 3: Conclusion.
Thus, limitation is that accounting does not record all events.
Final Answer:} Does not record all events.