Why is it necessary for accountants to assume that business entity will remain a going concern?

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Solution

It is necessary for accountants to consider that a business entity will remain a going concern as an asset will be calculated for the profit it earns along with the depreciation it is charged, both of which are not restricted only for one accounting period. Hence, it indicates continuity in business.

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Why it is necessary for accountants to assume that a business entity will remain a going concern?

The concept that assumes that a business would survive for an infinite time is called 'Going concern'.

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