| This concept states that a business firm will continue to carry on its activities for an indefinite period of time i.e. every business entity has continuity of life. | |
| it provides a basis for showing the value of assets along with depreciation in the balance sheet |
| Significance– facilitates preparation of financial statements |
| On the basis of this concept, depreciation is charged on the fixed asset |
| Assures investor that they will continue to get income on their investments. |
| In the absence of this concept, the cost of a fixed asset will be treated as an expense in the year of its purchase |
| A business is judged for its capacity to earn profits in future |