Revision question on preparation of financial statement.

Financial statements are the prime measure of management performance by the shareholders.

However, as management is responsible for the preparation of financial statements, shareholders have to rely on external verification by auditors in order to gain reasonable assurance that the accounts are free from material misstatements and can therefore be relied upon to give true and fair view of the affairs of the company.

Required:

Identify FIVE limitations which the preparation of financial statements imposes on discharge of accountability to the users of such statements.

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