Continuity

.pdf

School

Liberty University *

*We aren’t endorsed by this school

Course

632

Subject

Accounting

Date

Feb 20, 2024

Type

pdf

Pages

Uploaded by KidRatMaster654 on coursehero.com

CASE 2-4 CONTINUITY 1 Case 2-4 Continuity ACCT 632 School of MS: Accounting: Taxation, Liberty University January 21, 2024 Author Note I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to.

CASE 2-4 CONTINUITY 2 Abstract This paper pertains to continuity, a fundamental accounting principle influencing how a company presents information in its published financial statements. The Accounting Act improves the understanding of financial statements for various stakeholders. An analysis of corporate operations can be conducted by studying the data presented in publicly available financial statements accessible from the authorized electronic database dedicated to financial statements (Martin & Veres, 2021). This paper discusses continuity as the concept of a growing concern. It is a vital accounting theory that significantly influences the preparation and presentation of a company's financial statements in the accounting field. In addition, some sections discuss the description of continuity by Sprouse and Moonitz, the values of the assets which are important considerations for an investment choice, and it is essential to consider how the absence of continuity impacts the measurement of assets that are presented in the balance sheet of a corporation. Keywords : Continuity, investment, financial statement

CASE 2-4 CONTINUITY 3 Case 2-4 Continuity Sprouse and Moonitz described continuity in accounting as an expectation that a corporation would operate without interruption. It acts as the basis for the creation of financial statements with the premise that the organization will keep operating for an extended period. Continuity is a core principle in accounting that often affects how a corporation presents information in its published financial statements. According to Sprouse and Moonitz, continuity refers to the assumption that an entity will continue to function indefinitely until evidence suggests otherwise. If there is information indicating that the entity has a finite lifespan, it should not be perceived as continuing to operate endlessly (Cathey et al., 2022). Continuity can help us deal with disruption by enhancing our understanding of how individuals can form patterns that restore interrupted patterns and establish new work patterns and innovative methods to service organizations (Feldman et al., 2022). As for the assumption that the firm will continue to operate as it has in the past, the previous cost of the company's assets would impact the decision about making investments; historically, cost becomes irrelevant, as only the fair market value is significant. Bankruptcy serves as evidence that the business will not sustain its operations. No investment decision would be made without considering the company's fair market value, presuming that the company will continue to exist and create future cash flows. This assumption is essential for accurately reporting financial statements and provides stakeholders with a basis for understanding the company's financial situation and performance. The textbook states that the primary purpose of financial statements is to furnish information that is valuable for the process of making predictions. Financial projections should be presented when they can improve the dependability of users' predictions. Assuming the business's ongoing operation and its assets' utilization to

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Recommended textbooks for you

Financial & Managerial Accounting

Accounting

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:9781285595047

Author:Weil

Publisher:Cengage

Cornerstones of Financial Accounting

Accounting

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Cengage Learning

Survey of Accounting (Accounting I)

Accounting

ISBN:9781305961883

Author:Carl Warren

Publisher:Cengage Learning

Accounting (Text Only)

Accounting

ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Financial & Managerial Accounting
Accounting
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Accounting (Text Only)
Accounting
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning