Question

what is going concern concept?​

Answer 1

hlo mate ✌️

A going concern is a business that functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months. "Going concern" implies for the business the basic declaration of intention to keep operating its activities at least for the next year, which is a basic assumption for preparing financial statements that comprehend the conceptual framework of the IFRS. Hence, a declaration of going concern means that the business has neither the intention nor the need to liquidate or to materially curtail the scale of its operations.

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Answer 2

Answer:

(1) Going Concern Concept .

As per this concept it is assumed that the business will continue to exist for a long period in the future. The transactions are recorded in the books of the business on the assumption that it is a continuing enterprise. It is on this concept that we record fixed assets at their original cost and depreciation is charged on these assets without reference to their market value. For example, if a machinery is purchased which would last, say, for the next 10 years, the cost of this machinery will be spread over the next 10 years for calculating the net profit or loss of each year. Because of the concept of going concern the full cost of the machine would not be treated as an expense in the year of its purchase itself. Themarket value of the fixed assets is irrelevant and is not recorded in the balance sheet, as these assets are not going to be sold in the near future.