Going concern and Capital conservation: Difference between pages

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1.  
''Company law.''


A going concern is an entity which is commercially viable, able to pay its obligations as they fall due, and whose owners (or other controllers) intend it to continue in operation for the foreseeable future.
The company law principle - also known as capital maintenance - that capital should be conserved for the protection of creditors.  


 
For example, dividends can only legally be paid out of retained profits, not out of capital.
2.
 
The going concern basis of accounting requires that the accounts are prepared using the assumption that the business will continue in operation for the foreseeable future (more than 12 months) and that there is neither the aim nor need to liquidate or limit significantly the nature of the operations.
 
 
3.
 
More generally, a basis of valuing a business on the assumption that it will continue in operation.
 
Such a valuation may be made for accounting purposes or for other purposes.
 
 
4.
 
''Pensions''.
The assumption that a pension scheme continues without being discontinued. 
 
Going concern valuations are made on such a basis.




== See also ==
== See also ==
* [[Accounting concepts]]
*[[Capital]]
* [[Accruals concept]]
*[[Capital maintenance]]
* [[Asset value]]
*[[Company law]]
* [[Consistency]]
*[[Creditors]]
* [[Disaggregation]]
*[[Dividend]]
* [[Discontinuance]]
*[[Limited liability]]
* [[Discontinuance method]]
*[[Profit and Loss reserve]]
* [[Headroom]]
*[[Reserves]]
* [[Liquidation value]]
*[[Retained earnings]]
*[[Share capital]]
*[[Share premium]]


[[Category:Accounting_and_Reporting]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]

Revision as of 20:47, 29 January 2024

Company law.

The company law principle - also known as capital maintenance - that capital should be conserved for the protection of creditors.

For example, dividends can only legally be paid out of retained profits, not out of capital.


See also

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