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Going Concern Assumption

Going Concern Assumption

We assume that the company will be around for many years to come.

In accounting we often depreciate the cost of assets over several years and have long term assets and liabilities. If the company is only going to be around for one year, none of that makes any sense. All its liabilities and assets would be current. For common accounting practices to be valid, we must assume that the company will be in business a long time.

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