1 ‘The historical cost convention looks backwards but the going concern convention looks forwards.’ Required : ( a ) Explain clearly what is meant by: ( i ) the historical cost convention; ( ii ) the...

1

‘The historical cost convention looks backwards but the going concern convention looks

forwards.’

Required
:

(a) Explain clearly what is meant by:

(i
) the historical cost convention;

(ii
) the going concern convention.

(b) Does traditional financial accounting, using the historical cost convention, make the going concern

convention unnecessary? Explain your answer fully.

(c) Which do you think a shareholder is likely to find more useful – a report on the past or an estimate

of the future? Why?

(Association of Chartered Certified Accountants)