Question

What effect does the going concern concept have on the amounts at which long termasseys are carried on the balance sheet

Answer 1

The effect of the going concern concept has an affirmative effect on the amounts at which long terms are carried on the balance sheet:

1. The fixed assets having long production life, well be depreciated through out their life period.
2. The long term loans or notes can be written by the companies , which are paid off in considerable long period of time.
3. The equity share are been issued and transferred from one shareholder to another because of the going concern concept of the company.
4. The earnings of the company towards the shareholders or owners of the company are got accumulated under the Retained Earnings keeping in mind the fund requirement for the development and growth of the company.
5. Various long term purchase and sell-out agreement are entered and forms the part of the balance sheet.

Thus, the concept says that the concern will carry on the business until the final dissolution of the assets of the company take place. The company will carry on Assets and Liabilities for very long terms.

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