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June 2010 #5 (b)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › June 2010 #5 (b)

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by Ken Garrett.
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  • May 24, 2014 at 3:20 am #170402
    dookhan12
    Member
    • Topics: 76
    • Replies: 61
    • ☆☆

    Hello!

    Is this correct?

    – There has been no investment in new products.
    If new products are not being developed then the company will not be able to keep up with advancements in the fast paced medication industry. This can impact the going concern status as revenue, profitability and cash inflows would deteriorate making the company unable to meet its expenditure and manage it day to day operations.

    I’m generally confused with this requirement, “describe why these could impact
    upon the ability of the company to continue trading on a going concern basis.”
    How do I figure out how this indicator affect the going concern status?

    Thank you. 🙂

    May 24, 2014 at 10:50 am #170489
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10595
    • ☆☆☆☆☆

    There are well established lists of going concern indicators, such as loss of key customers loss of key staff and technology changes. Not developing products means that you can be overtaken by technology and soon you will not have any sales.

    Think Blackberry.

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