Accrual Basis
In order to meet
their objectives, financial statements are prepared on the accrual basis of
accounting. Under this basis, the effects of transactions and other events are
recognized when they occur (and not as cash or its equivalent is received or
paid) and they are recorded in the accounting records and reported in the
financial statements of the periods to which they relate. Financial statements
prepared on the accrual basis inform users not only of past transactions
involving the payment and receipt of cash but also of obligations to pay cash
in the future and of resources that represent cash to be received in the
future. Hence, they provide the type of information about past transactions and
other events that is most useful to users in making economic decisions
Going Concern
Financial
statements are normally prepared on the assumption that an enterprise is a
going concern and will continue in operation for the foreseeable future. Hence,
it is assumed that the enterprise has neither the intention nor the need to
liquidate or curtail materially the scale of its operations. If such an
intention or need exists, the financial statements may have to be prepared on a
different basis and, if so, the basis used is disclosed
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