Question

What is going concern concept?
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Answer 1

Explanation:

The going concern concept is a fundamental principle of accounting. It assumes that during and beyond the next fiscal period a company will complete its current plans, use its existing assets and continue to meet its financial obligations. Simply put, it is an assumption that the company will stay in business and that the value of its assets will endure. This underlying principle is also known as the continuing concern concept.

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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.