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While recording business transactions in the books of accounts, we assume that the business will be carried on indefinitely. That is why, the business purchases fixed assets like land and building, plant and machinery, vehicles, furniture. etc. If the concept of going concern is ·not there, we would have hired these assets and not purchased. These assets have been acquired for use and not for sale, so we maintain individual assets account and charge necessary depreciation on it.

According to International Accounting Standard “The enterprise is normally viewed as a going concern, that is as continuing in operation for the foreseable future”. It is viewed that the enterprise has an intention to be carried on for longer period. The concept of assets, liabilities, capital, revenue and expenses used in the accounting operation prove that the firm has to last long. Planning, organising and personnel policies substantiate the fact that the business has been assumed to be going entity. It is binding upon every accountant to treat business activity as a continuing process and record transaction accordingly.