NOTES

Ans.
Going Concern Concept
The  financial  statements  are  normally  prepared  on  the  assumption  that  an  enterprise  is  a  going  concern and will continue in operation for the foreseeable future.
Cost Concept
By this concept, the value of an asset is to be determined on the basis of historical cost, in other words, acquisition cost. Although there are various measurement bases, accountants traditionally prefer  this  concept  in  the  interests  of  objectivity.  When  a  machine  is  acquired  by  paying  
Rs.5,00,000, following cost concept the value of the machine is taken as Rs.5,00,000. It is highly objective and free from  all  bias. Other  measurement  bases  are  not  so  objective.  Current  cost  of  an  asset  is  not  easily  determinable. If  the  asset  is  purchased  on  1.1.1995  and  such  model  is  not  available  in  the  market, it becomes difficult to determine which model is the appropriate equivalent to the existing one. Similarly, unless the machine is actually sold, realisable value will give only a hypothetical figure. Lastly, present value base is highly subjective because to know the value of the asset one has to chase the uncertain future.