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Fundamental Accounting Assumptions

Fundamental accounting assumptions underlie the preparation and presentation of financial statements. They are usually not specifically stated because their acceptance and use are assumed. Disclosure is necessary if they are not followed. The Institute of Chartered Accountants of India issued Accounting Standard (AS-1) ‘Disclosure of Accounting Policies”.

Going Concern

The enterprise is normally viewed as a going concern, i.e. as continuing operations for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessary of liquidation or of curtailing materially the scale of the operations.


Guidance Note on Terms used in Financial Statements defines accrual basis of accounting as “the method of recording transactions by which revenue, costs, assets and liabilities are reflected in the accounts in the period in which they accrue.”

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