Going Concern Concept:
According to this concept it is assumed that the business entity is going to be in business for an indefinitely long period of time and is not likely to close down its business in a shorter period of time. This concept affects the valuation of assets and liabilities. As such, the assets are shown on the Balance Sheet at cost less depreciation and not at the current market price or realisable value. If the assets are to be disclosed at the correct value in the Balance Sheet, the current market price will be most suitable. However, as the business is likely to be a going concern in future and as the assets are not likely to be sold in the market in the near future, they are disclosed at cost less depreciation.
No comments:
Post a Comment