Accounting concepts
Sasi mcvv (73 Points)
13 August 2020
how is going concern concept a limitation of financial statements?
2 Replies
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 14 August 2020
It is not a limiting factor. This concept advises that a business is not a perpetual cash cow, but only till a foreseeable future I.e., one year. If you want to recognise a sale will happen after five years, under accruals concept you can book that transaction under deferred revenue. Hence, the going concern does not limit any transaction.
sabyasachi mukherjee
(27579 Points)
Replied 16 August 2020
Going concern concept is not a limitation of financial statement.
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