The way a company accounts for human resources is an example of which of the following financial statement limitations?
If you were trying to "cut and paste" is rarely work here. You will need to type the rest of it out.
Sra
The way a company accounts for human resources is an example of the limitation of financial statements known as "Intangible Assets."
Financial statements are prepared using historical cost accounting, which means that intangible assets such as human resources are not reported on the balance sheet. Human resources, including the skills, knowledge, and expertise of employees, are not recognized as an asset despite being valuable and playing a significant role in a company's success.
To account for human resources, companies often include expenses related to employee salaries, benefits, and training in their income statement. However, these expenses do not capture the true value of human resources as an asset.
To obtain a more comprehensive understanding of a company's human resources, stakeholders may need to refer to other non-financial measures, such as employee turnover rates, employee satisfaction surveys, or workforce productivity metrics. These indicators provide additional insights into the company's human capital and can help evaluate the potential long-term value of human resources.