The historical cost convention looks backwards but the going concern convention looks forwards. Required: (a) Explain clearly
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‘The historical cost convention looks backwards but the going concern convention looks forwards.’
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Required: (a) Explain clearly what is meant by: (i) the historical cost convention; (ii) the going concern convention. (b) Does traditional financial accounting, using the historical cost convention, make the going concern convention unnecessary? Explain your answer fully. (c) Which do you think a shareholder is likely to find more useful - a report on the past or an estimate of the future? Why?
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This question is related to accounting principles and conventions which play a critical role in how financial information is recorded and interpreted Lets address each part of the question in turn a i ...View the full answer
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Related Book For
Frank Woods Business Accounting
ISBN: 9780273759287
12th Edition
Authors: Frank Wood. Sangster, Alan
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