Question

write short notes on
1. Going concern concept
2. Consistency concept

Answer 1

1.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.

2.The consistency principle states that, once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods. Only change an accounting principle or method if the new version in some way improves reported financial results. if you make such a change, fully document its effects and include this documentation in the notes accompanying the financial statements.