Historical cost - The long term assets are presented at
historical cost and not at the realizable value. Therefore the
value of asseta presented in statement may be far less then the
market value. Accounting dosnt capture the change in market
prices.
Use of professional judgement also makes statement variable.
The preparer uses his own judgement while selecting the accounting
policies.
Accounting estimate - There are certain transaction whoes
amount cant be know at a time therefore these figures need to be
estimated as per relevant accounting standard.