Going concern are related to the premise that companies have a way to continue in the near future. A bankruptcy company or a company close to bankruptcy is against the active business.
Going concern is the basis of basic accounting. It is a premise that a company or other entity can work for a sufficient period of time to fulfill its obligations, obligations, purpose, etc. In other words, the company does not need to liquidize or fail in the future.
Going concerns give certain logic to the cost principle: Why does it report the current value of an asset in the long run since it makes no sense if a company is constantly concerned? However, if the value of the asset is an obstacle, the value of the asset may be less than the carrying amount.
Go refers to the accounting period of an enterprise with resources to operate indefinitely until the company prove different things, and this term refers to the ability of a company to earn enough revenue. Avoid bankruptcy. If the company is not concerned, this means that the company was bankrupt and the asset broke up..
The accountant uses current business principles to determine what kind of financial statement report should be made. Compared to quarterly earnings, companies can delay the possession of long-term property at a more appropriate time, like the annual report. Companies are still concerned if asset sales are not harmful to the ability to continue operations, such as closing small branches that assign employees to other departments within the company.
An accountant who considers a company as a permanent concern generally thinks that the company is wisely using the asset and does not need to liquidate it. Accountants can also use the current business principles to decide how to continue to incorporate business, reduce costs and move to other products, following asset sales.
principle of going concern:
Principles of basic accounting accepted by companies are continued in the near future. The meaning of this principle becomes apparent when the value of a running business is compared with the value of an injured person.
When an enterprise declares liquidation, all obligations that are perceived immediately immediately are tangible assets only sold for auctions or fires, and intangible assets (such as goodwill) are irrelevant. An ongoing business is the only type of commercial bank to borrow and suppliers earn credits. Directors of listed companies must explicitly state that they are taking all reasonable steps to ensure the company's survival opportunities (audited by independent audits).
If an entity is accepted as a project in the near future, the entity will prepare financial statements on fundamental concerns.
Concept of concern is an approach to the preparation of financial statements. An entity is assumed to have no intention or need to expand or expand the scope of its business. If management insists that an entity has no alternative to liquidate or reduce the scope of its business, the ongoing enterprise base can not be used and the financial statements are subject to various criteria such as "burst" .
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