which accounting concepts assumes that a business enterprise will not be liquidated in the near future? explain that concepts
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Going Concern is that concept
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Hello,
As per the Going Concern principle of Accouning, business is assumed to be continued for an indefinete period. As per this profit or loss of the business can only be ascertained when business is shut down. So owner of the business has to wait till the closure of his/her business to measure performance of its business. On the other hand, as per Accounting Period Concept the entire life of business is divided into smaller period of time (say one year) for measuring its performance. Therefore, accounting period principle is treated as a limitation of going concern concept.
"Men may come and go, business may go on and on"
Hope this answers your query.
Keep posting for further doubts!!
As per the Going Concern principle of Accouning, business is assumed to be continued for an indefinete period. As per this profit or loss of the business can only be ascertained when business is shut down. So owner of the business has to wait till the closure of his/her business to measure performance of its business. On the other hand, as per Accounting Period Concept the entire life of business is divided into smaller period of time (say one year) for measuring its performance. Therefore, accounting period principle is treated as a limitation of going concern concept.
"Men may come and go, business may go on and on"
Hope this answers your query.
Keep posting for further doubts!!
praneeth332:
hi kyleemani
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