Going concern in financial management, Financial Management

Going Concern in Financial Management

Going concern means in which business activities will continue for a fairly long period of time unless and until the business has entered into a procedure of liquidation.  This concept does not mean in which the business will continue for an infinite period of time, but it denotes in which the business is going to run for fairly long period of time so as to carry out business plans.

Under this concept it is assumed in which the business activities will continue for at least a period of time essential to meet its present contractual obligations and recover the original cost of its fixed assets.  This concept denotes in which the assets are obtains for utilization and not for resale. Under this concept utilization of resources for producing excellence and realization of revenue through their sale assumes significance.  Income is determined after charging cost of utilised resources to the revenue of that period.  Revenue and costs are recognized as and while they are earned or incurred and recorded in the financial statement of the period that they relate to.  This denotes that valuation of the business is completed on the basis of earning power rather than on the primary of the liquidation price of the enterprise.  This concept justifies for revenue realisation.  The revenue would be deemed to be realized along with the transfer of ownership of goods or services rendered.  Goods could be sold for cash or credit, thus earning of revenue is hard from cash collection from customers.

Posted Date: 2/6/2013 12:48:25 AM | Location : United States







Related Discussions:- Going concern in financial management, Assignment Help, Ask Question on Going concern in financial management, Get Answer, Expert's Help, Going concern in financial management Discussions

Write discussion on Going concern in financial management
Your posts are moderated
Related Questions
A floater where the coupon rate is computed as a fraction of the reference rate plus a quoted margin, are known as a de-leveraged floater. The general formula for this

Define the term- Cost of capital Cost of capital is the rate of return a firm should earn on its investments for the market value of the firm to remain unchanged. Acceptance of

$7000 are invested at 5% per annum compound interest compounded yearly.  What would be the amount after 20 years? Solution Here i = 0.05, P = 7000, and n = 20. Putting it i

Five Cs of Obtaining Credit The five crucial parts lenders examine previously issuing credit include: 1. Character.    This is a calculation of the borrower's integrit

What is a financial ratio? A financial ratio is a number that convey the value of one financial variable relative to another.  Put more easily, a financial ratio is the final

Q. What is Deposit Method? Deposit Method - Related to sales of real estate, under this method seller doesn't recognize any profits, doesn't record a note RECEIVABLE and contin

Briefly examine the significance of identification of investment opportunities in capital budgeting process

TC  Shipping Ltd has decided to purchase a machine to augment the company's installed capacity to meet the growing demand for its products. There are three machines under considera

Exchange of Physicals: A trader can also complete the futures contract by engaging in exchange of physicals. In this method, the parties agree to exchange cash and the commodit

Ask questionSally Thomson #Minimum 100 words accepted#