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The going concern concept in the assessment of creditworthiness of economic entities

Babicheva N.E. Voronezh State University, Voronezh, Russian Federation ( sigaeva@mail.ru )

Lyubushin N.P. Voronezh State University, Voronezh, Russian Federation ( lubushinnp@mail.ru )

Kondrat'ev R.Yu. Lipetsk Branch of Financial University under Government of Russian Federation, Lipetsk, Russian Federation ( romario_80@inbox.ru )

Journal: Economic Analysis: Theory and Practice, #10, 2017

Subject The article analyzes existing contradictions in the implementation of the going concern principle and securing the creditworthiness.
Objectives The aim is to provide a unique comprehensive study of the going concern concept in relation to creditworthiness of economic entities to synthesize two accounting concepts, i.e. the dynamic and static balance sheet.
Methods We employ general scientific principles and research methods, namely, a historical approach, analysis and synthesis, induction and deduction, grouping, comparison, abstraction, generalization, and analogy.
Results The paper proves the hypothesis that entity’s creditworthiness is a complex accounting and analytical characteristic reflecting the continuity of operations. If the entity does not ensure its creditworthiness, there exists a threat to its going concern. The lack of financial solvency leads to bankruptcy, and the economic entity may cease its operations.
Conclusions The existing contradictions in the going concern and creditworthiness assessment appeared in the 19th century. We suggest that the development of the theory and practice of accounting and economic analysis should now move towards the synthesis of accounting concepts of dynamic and static balance sheet through integrated reporting. This will enable to create information basis to reveal and prevent threats to going concern by assessment of creditworthiness and solvency of entities.


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