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When the firm sells the business as a going concern cash balance is transferred to?
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∙ 12y ago
The balance is transferred to prepare the Partner's Capital and Current Accounts.
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∙ 12y ago
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Revaluation account
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What are the advantages of the going concern concept?
A going concern is a business that operates without the threat of liquidation. The advantages of going concern are that the business declares the intention of running for at least 12 months.
Why is it necessary for accountants to assume that business entity will remain a going concern?
It is a basic assumption that the owners of the business would like to stay in the business. Hence Accountants prepare the books on the same premise.
What is going-concern Assumption?
Going concern is the assumption that the company will be around for the foreseeable future. If an auditor has a going concern issue, he/she may fear that the company will go bankrupt, etc.
What is This accounting concepts justifies the usage of accrual and deferrals?
Going concern
Why are assets recorded at cost price and not current values?
Cuz of 'going concern' principle...
What are the advantages of the going concern concept?
A going concern is a business that operates without the threat of liquidation. The advantages of going concern are that the business declares the intention of running for at least 12 months.
What employees at a local business heard that the business was going to increase its use of information systems. is a valid concern the employees could have.?
some employees at a local business heard that the business was going to increase its use of information systems. is a valid concern the employees could have.
Why is the going concern assumption an important consideration in understanding financial statement?
According to Going Concern Assumption it is assumed that the said business will continue in the foreseeable future and will not liquidate in future, This assumption ensures the faith of investors, potential investors, and all the stakeholders in the business. Thus the Financial Statement is prepared on the basis of Going Concern Assumption.
What is meant by No longer a going concern?
No longer operating as a business, although it may exist "legally".
What is the going concern assumption?
In accounting, "going concern" refers to a company's ability to continue functioning as a business entity. It is the responsibility of the directors to assess whether the going concern assumption is appropriate when preparing the financial statements. Financial statements are prepared on the assumption that the entity is a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations.
What does freehold going concern mean?
It generally refers to the sale of a business and freehold property. For example a going concern generally means the goodwill of an operating business and the freehold refers to the tenure of the property. so in this case it means for example £500,000 for the freehold of the property and inclusive of the value of the goodwill, therefore £500k buys you the business and the property.
What is the definition of cash flowand how would it equate in a business?
An amount or balance of money that goes in and out of a business it pretty much keeps the business going if there is no cycle of money going in and out the business isn't really making good profit
What is the disadvantage of the going concern concept?
One of the disadvantages of the going concern concept is that it may not accurately reflect fair market value. A business may not end up having to go out of business and liquidate its assets. The company could pull through and raise enough resources to stay operational.
Why is it necessary for accountants to assume that business entity will remain a going concern?
It is a basic assumption that the owners of the business would like to stay in the business. Hence Accountants prepare the books on the same premise.
What is the impact of a company financial Statements if it is not prepared on the assumption that an enterprise is a going concern?
A going concern is an accounting assumption that states that a business will stay in operation for the foreseeable future. When the financial statements are not prepared for the annual report, it is the responsible of the Board of Directors must put this information into the footnotes to the financial statements and state any factors that may threaten that status. Further, the fact that the business is not a going concern means that it can not pay its liabilities and realize its assets. The company's auditor is responsible to the Board of Directors and must determine whether or not the company is still a going concern. The auditor is required to disclose any negative trends in the company's business operations. Negative trends would be lower operating income, loan denials, loan defaults, repossession of assets, and more. The auditor then must not issue a "going concern opinion." Investors may have second thoughts about holding the stock of the company if an auditor does not issue a going concern opinion in the annual report.
What is going-concern Assumption?
Going concern is the assumption that the company will be around for the foreseeable future. If an auditor has a going concern issue, he/she may fear that the company will go bankrupt, etc.
What is the rule that requires financial statements to reflect the assumption that a business will keep operating instead of being closed or sold?
Going concern assumption
