Limitations of historic cost accounting

Reference no: EM13954460

Some commentators on financial reporting practices argue that financial statements produced under the historic cost convention do not provide relevant information to users of those statements in times of rising prices.

Requirements

(a) Identify the main limitations of historic cost accounting, explaining the nature of those limitations.

(b) Discuss how the use of other capital maintenance concepts to that applied under his- toric cost accounting might provide more useful information to users of financial statements.

Reference no: EM13954460

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