Going Concern Assumption

Going Concern Assumption refers to the basic assumption by the management at the time of preparing the financial statements that the business is expected to sustain for a long period of time at least beyond a year and management does not have any intention to sell or wind-up the business.For all entities preparing financial statements in accordance with GAAP or and International Accounting Standards, management is required to assess at each reporting date whether a business is a going concern or not. This impacts various elements of financial statements especially the accounting convention. If the management determines that business is not a going-concern or it has the intention to sell or wind-up the business then financial statements will be made based on realizable value rather than the commonly used historical cost convention.http://accountingclarified.com/