Going Concern Concept
The going concern concept is a fundamental accounting principle that assumes a business will continue to operate indefinitely, unless there is evidence to the contrary. This assumption affects the valuation of assets and liabilities and is crucial for financial reporting.
- Implications:
- Financial statements are prepared with the expectation of ongoing operations.
- Assets are recorded at their historical cost rather than liquidation value.
- Assessment:
- Companies must regularly evaluate their ability to continue operating.
- Any indication of potential discontinuation must be disclosed in financial reports.

Full Disclosure Concept
The full disclosure concept mandates that all relevant financial information must be disclosed in the financial statements to provide a complete picture to stakeholders. This ensures transparency and builds trust among users of financial statements.
- Components:
- Notes to financial statements that explain accounting policies, estimates, and contingencies.
- Any significant events that may impact the financial position or results.
- Importance:
- Helps users make informed decisions.
- Reduces the risk of misinterpretation of financial results.

Matching Cost with Revenue Concept
The matching principle states that expenses should be recognized in the same period as the revenues they help generate. This ensures that financial statements reflect the actual profitability of a business during a specific period.
- Application:
- Expenses related to specific revenues are recorded concurrently.
- This includes costs like cost of goods sold (COGS) matched with sales revenue.
- Benefit:
- Provides a clearer view of financial performance.
- Enhances the reliability of financial statements for decision-making.