04-27-2004, 05:02 PM
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Salam to all the accountants out there,
well in my opinion, it is impracticable that a company's current liabilities exceed its total assets and the company still earns profit. however, this assumption can only be true if we consider the profit as for the year beacause if the current liabilities exceed total assets, current liabilities should be reduced to become equal to total assets and this is only feasible if the company carry forward its accumulated loss.
secondly the auditor draws attention of the management in his report that the company assets are not sufficient to meet the current liabilities of the company which are required to be settled in the normal course or within 1 year of the balance sheet date.the going concern assumption address the same question that the entity will be able to realize its assets and discharge it s liabilities in the normal course of the biz.
so i think auditors opinion as to going concern assumption is justified.
May GOD fill your life with eternal peace and love.
Salam to all the accountants out there,
well in my opinion, it is impracticable that a company's current liabilities exceed its total assets and the company still earns profit. however, this assumption can only be true if we consider the profit as for the year beacause if the current liabilities exceed total assets, current liabilities should be reduced to become equal to total assets and this is only feasible if the company carry forward its accumulated loss.
secondly the auditor draws attention of the management in his report that the company assets are not sufficient to meet the current liabilities of the company which are required to be settled in the normal course or within 1 year of the balance sheet date.the going concern assumption address the same question that the entity will be able to realize its assets and discharge it s liabilities in the normal course of the biz.
so i think auditors opinion as to going concern assumption is justified.
May GOD fill your life with eternal peace and love.
