Explain about going-concern concept, Accounting Basics

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Q. Explain about Going-concern concept?

Except strong evidence exists to the contrary accountants assume that the business entity will continue operations into the indefinite future. Accountants call this supposition the going-concern or continuity concept. Presumptuous that the entity will continue indefinitely allows accountants to value long term assets such as land at cost on the balance sheet since they are to be used rather than sold. Market values of these assets would be relevant only if they were for sale. For illustration accountants would still record land purchased in 1988 at its cost of USD 100000 on the 2010 December 31 balance sheet even though its market value has risen to USD 300000.


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