Primary restriction of making demand, Financial Accounting

Assignment Help:

Q. Primary restriction of making demand?

The primary restriction of making demand forecasts lies in the fact that they are forecasts and hence their reliability is unknown. Most predicts are based upon a mix of historic information and expectations in relation to relevant influential variables. For instance the exchange rate predicts where the highest probability is attached to a rate of 1·54 Euro/£ is probable to be based on the statistical pattern of historic exchange rates including the standard deviation such that 1·54 Euro/£ constitutes the most frequently observed rate. This doesn't but necessarily means that the rate will be similar in the future - history doesn't always repeat itself.

Another restriction relates to the nature of the data being forecast. Weather forecasts are notoriously undependable because nature is such an uncontrollable force. Even if the UK climate has been hot on average for the past five years doesn't imply that this will be the case in the future. The factors which utter the weather are uncontrollable and consequently to a large degree unpredictable.

The forecast as well runs into problems because it seeks to link two unrelated variables. The state of the weather is completely independent of the exchange rate and vice versa as well as they can only be linked in the way suggested by the table if the range of alternative observations is restricted. This is eventually a distortion of a reality which is far more complex.


Related Discussions:- Primary restriction of making demand

Inter company balances-group accounts, Inter Company balances One of th...

Inter Company balances One of the companies may appear as receivable (debtor) or payable (creditor) in the other company’s books. Just like in accounting four branches, such in

Illustrations of accounting policies-financial statement, Illustrations of ...

Illustrations of Accounting Policies A Ltd., has decided to change its policy of writing off borrowing costs to capitalizing the same. As at 31st December, 2003, the company had

Prepare a journal entry to record, On January 1, a company issued and sold ...

On January 1, a company issued and sold a $400,000, 7%, 10-year bong payable, and recieved proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses

Show the investment appraisal method, Q. Show the investment appraisal meth...

Q. Show the investment appraisal method? The investment appraisal method is concerned with assessing the value of future cash flows compared to the cost of investment. Since fu

Calculate liquidity and balance sheet, Jaedan Industries has the following ...

Jaedan Industries has the following account balances as of December 31, 2010.  The firm's dividend payout ratio is 25% and the tax rate is 34%.  The firm's stock price on December

Basic interest rate and maximum interest rate, Suppose a risk neutral agent...

Suppose a risk neutral agent has $100,000 today that he wants to save for one year. Compare the following two savings plans. Bank A offers a standard savings account with 4% p.a

Prepare the journal entries to record non-monetary exchange, Moore Corporat...

Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corporation uses the nearest full

Case law, GOLD MOUNTAIN SKI RESORT CASE You work for a venture firm and hav...

GOLD MOUNTAIN SKI RESORT CASE You work for a venture firm and have been asked to analyze a proposal from a group of investors interested in building a new ski area in Colorado. The

Explain briefly the role of computers in accounting, Q. Explain briefly the...

Q. Explain briefly the role of computers in accounting? Computers can be used as accounting machines and perform all the functions which accounting machines perform. Some of th

Jj, liabilities and its types

liabilities and its types

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd