Emphasize on Going Concern by the auditor

[smraza]

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Hello!

I'm a beginner in this field, and cannot understand your point. How can the current liabilities exceed your total assets, or by 'total assets' you're refering to the total net assets?, i'm confused on that, kindly explain by giving an appropriate example.

Regards
Mubeen

Edited by - sniper on Jul 13 2004 60941 PM
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Dear Mubeen,
lets consider an example of a balance sheet,

Non Current Assets.......25,000
Current Assets.............<u>35,000</u>
Total Assets................<u>60,000</u>

Equity.......................(40,000)
Non current Liabilities....10,000
Current Liabilities..........<u>90,000</u>
Total Liabilities.............<u>60,000</u>

in above case the current liabilities are greater than total assets,
reason being the negative equity which resulted due to heavy losses in preceeding year(s) which exceeded the share capital of company.
I hope that will clear your problems.

SMR