alexa The Going Concern Assumptions and Presentation on Financial Statements

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The Going Concern Assumptions and Presentation on Financial Statements

The going concern principle is a fundamental financial statement assumption that assumes an entity will remain in business for the foreseeable future. Remaining in business means that the entity will not be compelled to end their operations, liquidate their assets, or go into bankruptcy. The going concern principle plays a major role in the accounting standards that allow for the deferral of recognition of expenses and revenue. Since the business is assumed to continue to exist into the future, delayed recognition may be appropriate under certain circumstances. If the business shows signs that it is not in the position to be assumed to continue to exist into the near future, this is known as going concern risk. Some of these signs may include a trend of operating losses, defaulting on loans, legal proceeds against the entity and so forth. Read More....

 
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