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?

Answer rating: 100% (QA)

A 1Historical cost convention An accounting convention that values an asset for the balance sheet at the price paid for the asset at the time of its a... View the full answer