1. It records only transactions which can be recorded in monetary terms:
Qualitative aspects like managerial skill, Services of experts, etc. are not recorded.
2. Accounting is a post mortem survey:
It records events as they have taken place. For example, expenses are recorded as incurred, assets are recorded at their cost of purchase. There is no scope for ascertaining what the appropriate expenditure or cost of acquisition should have been.
3. Effect of price level changes are not considered:
Transactions are always recorded in the books at cost price and not at market price.
4. Inexactness:
Accounting transactions are not exact. Different firms have their own different methods, so the results of the business will change in the practice.
