What is the business?
In business is an interest in an entity that should continue to operate in the near future, usually over the next 12 months. As a noun, the word concerns has been derived since the beginning of the 20th century, which is synonymous with business. It is assumed that it is usually that the company will soon stop from business or destroy its assets. It usually determines fiscal health of society, ie whether it is healthy enough to continue operations or is sufficiently ill to require termination.
The meaning of the concept is evident in the valuation of business assets. If the company does not continue to operate in the future, the basis of accounting is the value of the decay where assets and liabilities are reported as a purely feasible value. This is the amount that is expected to be realized if the assets are stated for sale. The life life of the machine is five years. Depreciation is calculated on the basis of the value of the machine divided by its estimated life, or $ 10,000 divided by five equal to $ 2,000 per year. In zThe value of the copier machine is reflected at the end of the first year of $ 8,000 in the financial statements.
There are usually two main parties involved in the company's evaluation: management or director of the company and its auditors. Directors usually determine whether the assumption will be used in the report on the financial statements. The Company must publish in the form of notes on the financial statements if there are doubts about the status of the company.
The company's auditor can perform a pedestrian audit to determine whether the status is suitable for the company and whether there are valid reasons to believe differently, which should be published. The auditor is obliged to provide an opinion on concerns about his doubt about the status. It provides a modified opinion if the company reveals doubts and risks, and a qualified opinion if it does not take admission.
It may also be required by any major creditor or financier to make a problem assessmentDepending on the factors that cause a re -evaluation. Accounting on the fact that the company assumes that the company will not cease trading and that during business will be able to realize assets and pay obligations. In order to continue, the company must generate enough income to finance its operations.