Question 14 of 26
Q.Write short notes on Going Concern concept.
Tamil Nadu DgeTamil Nadu HSC First Year (DGE) Commerce Board 2023Subjective· 2mImportance★★★★★
54% · 14/26 Questions
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Start your 14-day free trial to unlock the full solution →The going concern concept assumes a business will run indefinitely, which justifies recording assets at cost and spreading their cost over their useful life.
The going concern concept assumes that a business will continue its operations for a long and indefinite period, and that there is no intention or necessity to close it down or curtail its activities significantly.
Because of this assumption:
- Fixed assets are recorded at cost and their cost is written off as depreciation over their useful life, instead of showing their current market or break-up (liquidation) value.
- Expenses are split between current and future periods (e.g. prepaid expenses, deferred revenue expenditure).
- Outside parties are willing to enter into long-term dealings with the firm. …
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