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Which accounting concept assumes that a business will continue to operate indefinitely?
- a)Going Concern Concept
- b)Money Measurement Concept
- c)Matching Concept
- d)Dual Aspect Concept
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Which accounting concept assumes that a business will continue to oper...
Going Concern Concept
The Going Concern Concept is an accounting principle that assumes a business will continue to operate indefinitely and will not be liquidated or forced to cease operations in the near future. It is one of the fundamental principles of accounting and forms the basis for preparing financial statements.
Key Points:
- Definition: The Going Concern Concept assumes that a business will continue its operations in the foreseeable future, typically for at least the next 12 months. It assumes that the business will be able to meet its obligations and continue to generate profits.
- Financial Statements: Under this concept, financial statements are prepared on the assumption that the business will continue to operate as a going concern. This means that assets and liabilities are recorded at their historical cost and not their liquidation or market value.
- Valuation of Assets and Liabilities: The Going Concern Concept affects the valuation of assets and liabilities. Assets are recorded at their original cost and are not adjusted to their current market value. Liabilities are recorded at their expected settlement amount rather than their liquidation value.
- Implications for Decision-Making: The assumption of a going concern has significant implications for decision-making. It allows businesses to plan for the future, make long-term investments, and secure financing. It also provides stakeholders with confidence in the company's ability to continue operations and generate future profits.
- Disclosure: In some cases, if there are doubts about a business's ability to continue as a going concern, it may be necessary for management to disclose these uncertainties in the financial statements. This ensures that users of the financial statements are aware of the potential risks and uncertainties.
- Exceptions: While the Going Concern Concept is widely applied, there may be situations where it is not appropriate. For example, if a business is in the process of liquidation or has significant financial difficulties, the concept may not be applicable, and alternative accounting methods may need to be used.
Overall, the Going Concern Concept is a fundamental principle in accounting that assumes a business will continue to operate indefinitely. It provides a basis for preparing financial statements and supports decision-making by allowing businesses to plan for the future.
The Going Concern Concept is an accounting principle that assumes a business will continue to operate indefinitely and will not be liquidated or forced to cease operations in the near future. It is one of the fundamental principles of accounting and forms the basis for preparing financial statements.
Key Points:
- Definition: The Going Concern Concept assumes that a business will continue its operations in the foreseeable future, typically for at least the next 12 months. It assumes that the business will be able to meet its obligations and continue to generate profits.
- Financial Statements: Under this concept, financial statements are prepared on the assumption that the business will continue to operate as a going concern. This means that assets and liabilities are recorded at their historical cost and not their liquidation or market value.
- Valuation of Assets and Liabilities: The Going Concern Concept affects the valuation of assets and liabilities. Assets are recorded at their original cost and are not adjusted to their current market value. Liabilities are recorded at their expected settlement amount rather than their liquidation value.
- Implications for Decision-Making: The assumption of a going concern has significant implications for decision-making. It allows businesses to plan for the future, make long-term investments, and secure financing. It also provides stakeholders with confidence in the company's ability to continue operations and generate future profits.
- Disclosure: In some cases, if there are doubts about a business's ability to continue as a going concern, it may be necessary for management to disclose these uncertainties in the financial statements. This ensures that users of the financial statements are aware of the potential risks and uncertainties.
- Exceptions: While the Going Concern Concept is widely applied, there may be situations where it is not appropriate. For example, if a business is in the process of liquidation or has significant financial difficulties, the concept may not be applicable, and alternative accounting methods may need to be used.
Overall, the Going Concern Concept is a fundamental principle in accounting that assumes a business will continue to operate indefinitely. It provides a basis for preparing financial statements and supports decision-making by allowing businesses to plan for the future.
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Which accounting concept assumes that a business will continue to oper...
The going concern concept is an accounting concept that assumes a business will continue to operate indefinitely, unless there is evidence to the contrary. This concept is based on the belief that a company will not be winding up or selling its assets in the near future and will be able to meet its obligations. It justifies the preparation of financial statements as a continuous series of statements, reflecting the financial position and performance of the business over time.
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Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer?.
Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which accounting concept assumes that a business will continue to operate indefinitely?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'A'. Can you explain this answer?.
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