Identify the statement which is not the limitation of the Financial Analysis.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Financial Analysis considers price level changes
A limitation of financial analysis is that it does not consider price level changes, because the statements are kept at historical cost. Saying that it does consider them is the opposite of the limitation, so it is not a limitation.
Option (2) Financial Analysis does not consider price level changes — A true statement. A limitation listed in the book.
Option (3) Financial statement does not reflect the current position — A true statement. A limitation listed in the book.
Option (4) Only monetary information is considered in financial statements — A true statement. A limitation: non-monetary aspects are ignored.
NCERT (2026-27 edition):
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