11..Explain why financial repor ts prepared under the historical cost convention are subject to the following major...

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11..Explain why financial repor ts prepared under the historical cost convention are subject to the following major limitations:

● inventor y is under valued

● the depreciation charge to the income statement is understated

● gains and losses on net monetar y assets are undisclosed

● balance sheet values are understated

● periodic comparisons are invalidated.

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Financial Accounting And Reporting

ISBN: 9780273712312

12th Edition

Authors: Barry Elliott, Jamie Elliott

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