What is going concern concepi in aacounting
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As per the going concern concept an entity is assumed to be existing for an indefinite period.. This is one of the 3 fundamental accounting assumption as well
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" Going Concern Concept "
Under this concept, it is assumed that the bussiness will continue to exist for a long period of time. Due to this concept, assets and liabilities are classified into :-
◆ Fixed Assets
◆ Current Assets
◆ Long -term liability
◆ Short -term Liability
This Concept also helps other bussiness undertakings to make contracts with specific bussiness units for bussiness dealings in future. Since, there is some degree of continuity of every unity and no one can accurately predict the future of an entity due to the possibility of cessation of life. It is better to treat the same as Going concern. It is on this concept, we record fixed assets at their original cost and depreciation is charged on these assets without reference to their market value.
Under this concept, it is assumed that the bussiness will continue to exist for a long period of time. Due to this concept, assets and liabilities are classified into :-
◆ Fixed Assets
◆ Current Assets
◆ Long -term liability
◆ Short -term Liability
This Concept also helps other bussiness undertakings to make contracts with specific bussiness units for bussiness dealings in future. Since, there is some degree of continuity of every unity and no one can accurately predict the future of an entity due to the possibility of cessation of life. It is better to treat the same as Going concern. It is on this concept, we record fixed assets at their original cost and depreciation is charged on these assets without reference to their market value.
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