Going concern is a basic underlying assumption in accounting. Explain why the going concern basis is...

Going concern is a basic underlying assumption in accounting. Explain why the going concern basis is important in understanding financial statement; Support your answer with evidences

Expert Solution

Going Concern Concept

The going concern concept of accounting implies that the business entity will continue its operations in the future and will not liquidate or be forced to discontinue operations due to any reason. A company is said to be a going concern if no evidence is available to believe that it will or will have to cease its operations in foreseeable future.

Importance :

The going concern concept of accounting is of great importance for accountants because if a company is a going concern, it must prepare its financial statements in accordance with applicable financial reporting framework such as generally accepted accounting principals applicable in United States of America (US-GAAP) and international financial reporting standards (IFRS).

The auditors conduct their own evaluation to see whether the going concern assumption is appropriate or not at the time of auditing financial statements even if the company claims to be a going concern.

ekkarill92 answered 4 months ago

Evaluate why the accounting assumption of “going concern” is of interest to auditors. Are there specific...

Evaluate why the accounting assumption of “going concern” is of interest to auditors. Are there specific audit procedures that must be performed related to the going concern assumption? Why or why not?

a) The Conceptual Framework includes the Going Concern Assumption. What is the going concern assumption, and...

a) The Conceptual Framework includes the Going Concern Assumption. What is the going concern assumption, and how does it affect the financial statements we prepare? b) Why is it important that a manufacturer disclose the cost of each classification of ending inventory that it holds at year end?

Why does the accountant use the business entity concept? And, When is the going-concern assumption not...

Why does the accountant use the business entity concept? And, When is the going-concern assumption not to be used?

Describe the going concern assumption and describe how it is considered by auditors.

Discuss the following accounting principles: Going Concern Matching Principle Monetary Unit Assumption Full Disclosure Principle Time...

Discuss the following accounting principles: Going Concern Matching Principle Monetary Unit Assumption Full Disclosure Principle Time Period Assumption Revenue Recognition Principle Matching Principle Cost Principle Relevance,Reliability and Consistency. Principle of Conservatism Materiality Principle.

1_ basic objectives of accounting period assumption 2_Does the accounting period assumption affect the valuation of...

1_ basic objectives of accounting period assumption 2_Does the accounting period assumption affect the valuation of assets and liabilities 3_which is the most popular accounting period followed by companies in Oman

a. Economic entity assumption g. Matching principle b. Going concern assumption h. Full disclosure principle c....

a. Economic entity assumption g. Matching principle b. Going concern assumption h. Full disclosure principle c. Monetary unit assumption i. Relevance d. Periodicity assumption j. Verifiability e. Historical cost principle k. Comparability f. Revenue recognition principle l. Representational faithfulness m. Fair Value Principle n. Control Note that each principle or qualitative characteristic may be matched to more than one phrase or not at all ____ 1. Measuring assets in dollars rather than units. ____ 2. Recognizing revenues when risks and...

Question 4 [20 marks] Going concern assumption is an important fundamental principle in the preparation of...

Question 4 [20 marks] Going concern assumption is an important fundamental principle in the preparation of financial statements. Therefore the auditor must take particular attention of this assumption as he carries out his audit. Required: a. What is going concern? (5) b. How does an auditor identify going concern factors and what is its effect on the audit on the audit report? (15)

a)Identify the qualitative characteristics of accounting b)Describe the basic assumption of accounting

CMR- Introduction to Marketing 1. What is the basic assumption/underlying premise of VALS? 2. What are...

CMR- Introduction to Marketing 1. What is the basic assumption/underlying premise of VALS? 2. What are the two main classification criteria VALS uses? 3. What are the three principal motivations VALS uses? 4. Do you agree or disagree with your VALS Primary and secondary categorization and why?

Question