AUDITING 01 Nature of Auditing

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Q10 (b) Write shorts notes on "Going Concern Concept". Ans:- As per AS 1, “Disclosure of Accounting Policies”, the “Going Concern”, is one of the f______ accounting assumption und_ financial statements. This Going Concern concept en that the entity will continue for the f_ future. Accounts are p on this concept unless there are in that going concern concept is not hol good for a particular entity. On account of this basic c of going concern, assets and liabilities are r_ on the basis that the entity will be able to re_ its assets and di its liabilities in the normal course of business. If this assumption is unj, the entity may not be able to realise its assets at the re_ amounts and there may be ch in the amounts and m dates of liabilities. AS 1, “Disclosure of Accounting Policies”, also requires that no sp_ disclosure is required in case the same has been followed in the pr___ of financial statements. In case this assumption is not fo_, the fact should be disclosed. SA 570 “Going Concern”, es standards on the auditor’s re_ in the audit of financial statements reg the management’s use of the going concern assumption in the preparation and pr___ of the financial statements.

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