Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason.

In other words, a going concern is expected to have the following things working in their favour:

1. The business is capable of running the daily operations and has capital and raw materials to do so.
2. A business has the ability to pay off the debt during the accounting period.
3. There should be demand in the market for the products or services offered by the company.
4. There should be no changes in the law governing the business.

Importance of Going Concern Concept in Accounting

Going concern concept is very important for the generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The concept of going concern plays a significant role in the way assets are treated.

The concept of depreciation and amortization are based on the assumption that a business will continue to perform its operations in the near future (this period is the next 12 months after an accounting period).

Advantages of Going Concern Concept

Following are some of the advantages of the going concern concept

1.Companies during the formation years will be purchasing fixed assets that will be requiring expenditure upfront, but such assets will be providing the benefits spread over a long term, that is well beyond one accounting period. Therefore, the going concern concept provides a way to record the value of such assets.

2. It is the basis on which the profits and losses of the business are recorded for the year to which it belongs.

Disadvantages of Going Concern Concept

Listed below are some of the disadvantages of the going concern concept:

1. Financial statements are prepared at cost and not on the basis of current market value. In such a case, if the company in an event of liquidation, will have assets valued at the market value, and as such these values will be different from the value determined at cost.

2. In the event of business being liquidated, the financial statements will be calculated on the on going concern basis, which can be misleading for the stakeholders.

All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.

If you have received an income tax notice, please do not worry, That May be just Information of ITR Process.

But Also,

An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income. Income tax department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. Such communication to the taxpayer post the preliminary assessment is called intimation under Section 143(1). The preliminary assessment is wholly computerised and does not have any human intervention and is delegated to Centralised Processing Center (CPC).