maintenance of capital means
Answers
Capital maintenance rules exist so that the capital of a company is preserved for the purpose of paying its creditors in the event of a winding-up procedure. This ensures that only a company's profit can be distributed to shareholders while business is ongoing
Because
The physical capital maintenance concept requires the adoption of the current cost basis of measurement
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Answer:
What is Capital Maintenance?❇
=> Technically, the capital maintenance concept means that the amount of net assets should be reviewed for changes before determining the profit generated during an accounting period. From a practical perspective, this is rarely done - controllers simply calculate the amount of profit and do not review for compliance with the capital maintenance concept at all.
Why is it Important?❇
=> Capital maintenance rules exist so that the capital of a company is preserved for the purpose of paying its creditors in the event of a winding-up procedure. This ensures that only a company's profit can be distributed to shareholders while business is ongoing.
More About Capital Maintenance-❇
Capital includes all goods that are made or created by humans and used for producing goods or services. Capital can include physical assets, such as a production plant, or financial assets, such as an investment portfolio. ... Capital can also refer to money invested in a business to purchase assets.
Explanation:
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