The Importance of the Going Concern Assumption in Financial Reporting and Analysis 15 april 2025 – Posted in: Bookkeeping
In addition, management must include commentary regarding its plans on how to alleviate the risks, which are attached in the footnotes section of a company’s 10-Q or 10-K. The reason the going concern assumption bears such importance in financial reporting is that it validates the use of historical cost accounting. The concept directly impacts how assets and liabilities are reported on the balance sheet. For example, if management said that the company is operating well,…
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