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Accounting concepts
how is going concern concept a limitation of financial statements?
Replies (2)
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.
Going concern concept is not a limitation of financial statement.
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