WHERE NO ONE STANDS ALONE

 



“I believe, that somewhere in the darkest night,

a candle glows”

From the song ‘I Believe’ by Tom Jones

 

There is an accounting concept called ‘Going-concern Concept’, which is also known as ‘Continuity Concept’. This is taught to every Accountancy student, right when he or she is about to embark upon the journey of  learning this subject. I have taught this to my students for over four decades. But, every time I have taught it, I have learnt something new – something fresh – about it…

The core idea of the ‘Going-concern Concept’, which the accountant has to bear in mind, is:

That, the enterprise, whose books of accounts he is expected to maintain, has an indefinite life…

That, it is not going to dissolve in a foreseeable future…

That, it can outlive all its assets, including all the Fixed Assets…

That, it can, even, outlive its Owners, like partners or shareholders.

 

Now, because the enterprise has an indefinite life, it becomes necessary to break this long and indefinite life into small units called ‘Accounting Years’ (of 12 months). This helps the accountant to close the books of the enterprise at the end of each accounting year and prepare a Profit & Loss A/c (to ascertain the profit or loss for the year), and a Balance Sheet (to know the financial position as on the year-ending date).

Thus, alongside the ‘Going-concern Concept’, every student is also encouraged to learn the ‘Accounting-year Concept’… They are the two sides of the same coin… The Accountant is asked to remember these facts:

The  enterprise is a ‘Gong Concern’… It can go on and on and on.

Only for convenience, the books of the enterprise are to be closed at the end of each accounting year…

But, the books will have to be opened, afresh, when the new accounting year begins…

 

Did I say, somewhere at the start of this Post, that each time I teach the ‘Going-concern Concept’ to my students, I end up learning something new, something fresh?

 



Today, as 2020 is coming to an end, we have to remember a few realities:

This enterprise called ‘Life’ is a ‘going concern’… It will go on and on and on…

It can – and will – outlive all the magnificent assets you and I have built here on this earth…

It can – and will – outlive you and me…

Today is only a year-end… A time to ‘close the books’ and to reflect…

But, tomorrow, you and I will have to open a new set of books – afresh… Yes, with hope, upbeat…

 



2020 had been an ‘abnormal year’. In Accountancy, whenever we value the Goodwill of an enterprise (on the basis of its past profits), we are encouraged to ignore the abnormal years. That’s because, abnormal years are very rare… They don’t recur. Likewise, in order to approach Life with a buoyant spirit, we need to set aside the years of abnormal pain, struggle and fear. The abnormal year’s loss can be very well set-off against the profits of the future…

 

We need to believe in that truth…




Wishing you all a very upbeat New Year. 2021…

 

 

GERALD D’CUNHA

 

Pic’s.: pixabay

 

Videos: 1. Elvis Presley  2. Tom Jones/JimJohmsam

 

Comments

Sunil sir said…
This comment has been removed by the author.
January 1, 2021 at 12:55 PM
Sunil sir said…
Very well compared going concern concept with year 2020. Hope this new year brings loads of happiness to all of us.
January 1, 2021 at 12:55 PM
Sunil sir said…
This comment has been removed by the author.
January 1, 2021 at 12:55 PM
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