AFM291 Lecture Notes - Lecture 3: Audit, Cookie Jar, Financial Statement
Document Summary
If you cannot generate positive recurring cash flows from operations, then the company is going to fail. Then you will have to go more external financing. And you finance will start to dry out. Or you start selling assets that will become a vicious cycle. Ifrs argues than if business records on cash basis, it will be easier. Allowance for doubtful accounts - estimate when you have to write off and whether if you will be able to collect it. Recorded not the period in which they occurred but paid. Discounted future cash flows has an element of uncertainty. The role of going concern assumption in accrual accounting. Ppe is assumed to be used in the future years according to the going concern. Ppe will have estimated accumulated depreciation in the going concern. Depreciation - systematic allocation of a cost of an asset over its expected useful life.