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any2002uk
any2002uk Registered Posts: 88 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
in my kaplan book there is no information about going concern concept! i am now practicing all exam papers of FRA for june.

please could you give any example of questions if they aks similiar. for example if they asked you
what is the 4 objectives of FRS18 ? (that is accounting polities)
so you know the 4 answers but what if they ask in very tricky questions more than this question? i find them very confuse unless they use my similiar example of question very straightfoward and clear.
what is Frs15 is it for deprecation?

why do we have deprecation for?(because they are fixed assest and value will be reduce in later years for future sale)
why do we have net relistic value? (maybe my answer is that we can pick the lower stock then add them up?
thanks

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  • PAMDILL
    PAMDILL Registered Posts: 721 Epic contributor 🐘
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    any2002uk wrote: »
    in my kaplan book there is no information about going concern concept! i am now practicing all exam papers of FRA for june.

    please could you give any example of questions if they aks similiar. for example if they asked you
    what is the 4 objectives of FRS18 ? (that is accounting polities)
    so you know the 4 answers but what if they ask in very tricky questions more than this question? i find them very confuse unless they use my similiar example of question very straightfoward and clear.
    what is Frs15 is it for deprecation?

    why do we have deprecation for?(because they are fixed assest and value will be reduce in later years for future sale)
    why do we have net relistic value? (maybe my answer is that we can pick the lower stock then add them up?
    thanks
    Going concern concept is the concept that everything is accounted for at year end on the basis that the company is gong to carry on trading - in other words stock and assets are not about to be sold in a fire sale by liquidators.

    Depreciation is under accruals concept in that the costs of all sales in the year have to be accounted for in the year in which they occurred. Therefore the use of the fixed assets is accounted for in that year.

    Stock is accounted for without any value added - you are not allowed to account for it at the sale price as then you are claiming the profit in the wrong year. If stock is damaged you have to account for it at the cost of it less the cost of putting it right or if you have to sell it at less than cost then it is that price you account for.
  • any2002uk
    any2002uk Registered Posts: 88 Regular contributor ⭐
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    thank you for this information

    is going concern concept mean that the company make their last final report as no more trading in next year?
  • Rachey
    Rachey Registered Posts: 589 Epic contributor 🐘
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    PAMDILL wrote: »
    Going concern concept is the concept that everything is accounted for at year end on the basis that the company is gong to carry on trading - in other words stock and assets are not about to be sold in a fire sale by liquidators.

    I've quoted this already written by Padmill. She's basically summed it up there.

    It's the opposite, it means the company will carry on trading. So the asset cost will be accurate. If the company was NOT a going concern then the NBV of the assets would be lower as they would be sold cheaply go get rid of them.

    Hope that helps :001_smile:
  • reddwarf
    reddwarf Registered Posts: 528 Epic contributor 🐘
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    For info and I thought rather quaint ! Osborne books state the concept of 'Gone Concern' - needs no explanation!

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