Financial Accounting Data Has Some Inherent Limitations to Investors

Multiple Choice

Financial accounting data has some inherent limitations to investors. Which of the following is a limitation?

I. Not all economic events are easily quantifiable.
II. Many accounting entries rely heavily on estimates.
III. Historical costs do not accurately reflect the true value of firms.
IV. Inflation can distort analysis of accounting data.

A) I, II and III
B) I, III, and IV
C) II, III, and IV
D) I, II, III, and IV