Business units lasts indefinitely Mention and explain the concepts on which the statement is based?
Hi Monica, as per the statement (provided by you), "Business units lasts indefinitely" implies that the business is based on the Going Concern Concept.
According to which, business is assumed to be continued for an indefinite period. As per this profit or loss of the business can only be ascertained when business is shut down. So owner of the business has to wait till the closure of his/her business to measure performance of its business. On the other hand, as per Accounting Period Concept the entire life of business is divided into smaller period of time (say one year) for measuring its performance. Therefore, accounting period principle is treated as a limitation of going concern concept.
Or we can say that "Men may come and go but the business may go on and on"
For example, An oil and gas firm operating in Sudan is stopped by a Sudanese court from carrying out operations in Sudan. The firm is not a going concern in Sudan, because it has to shut down.
I hope this answers you query.
However, if you still find any difficulty then specify the point in which you have doubt with all its related details so that we can help you in the best possible way.
Keep Posting!!
According to which, business is assumed to be continued for an indefinite period. As per this profit or loss of the business can only be ascertained when business is shut down. So owner of the business has to wait till the closure of his/her business to measure performance of its business. On the other hand, as per Accounting Period Concept the entire life of business is divided into smaller period of time (say one year) for measuring its performance. Therefore, accounting period principle is treated as a limitation of going concern concept.
Or we can say that "Men may come and go but the business may go on and on"
For example, An oil and gas firm operating in Sudan is stopped by a Sudanese court from carrying out operations in Sudan. The firm is not a going concern in Sudan, because it has to shut down.
I hope this answers you query.
However, if you still find any difficulty then specify the point in which you have doubt with all its related details so that we can help you in the best possible way.
Keep Posting!!