Answered: What is a goingconcern problem? What…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

What is a goingconcern problem? What factors can contribute to such a
problem?

Expert Solution

Step 1

Given:

To analyse about the going concern problem and its factors contribution as follows,

Step 2

The Going concern concept is also known as continuity concept. Based on this as per the recorded assest the firm will continue the operation and meet the obligations based on business normal course.

This leads to going concern problem.

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Follow-up Question

What are the consequences of ignoring the problem?

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