non-financial aspects

What are the limits?

Accounting statements (income statement, balance sheet, cash‑flow statement) are great for numbers, but they don’t always show the full picture. Think of them as a snapshot of a car’s mileage – you see how far it’s travelled, but you don’t know if the engine is healthy or if the paint is rusting.

• 📈 Future prospects – Statements capture the past, not what might happen next.
• 🧩 Intangible assets – Brand value, patents, and employee skills are often missing.
• 🌱 Environmental impact – Pollution costs or carbon footprints are not reflected.
• 🤝 Social responsibility – Community engagement or employee satisfaction aren’t in the numbers.
• ⚙️ Operational efficiency – How well a company uses its resources can be hidden behind generic expense categories.

Why does this matter for exams?

When you read a question about limitations, examiners expect you to:

1. Identify at least two non‑financial limitations.
2. Explain how these limitations could affect a user’s decision.
3. Suggest one way a company might disclose this missing information.

Tip: Use the “What, Why, How” structure in your answer.

Exam Tip Box

📌 Remember:

• Use examples (e.g., brand value, environmental cost).
• Keep answers concise – 1–2 sentences per point.
• Show understanding of how the limitation affects decision‑making.