- This topic has 3 replies, 3 voices, and was last updated 8 years ago by
.
- Posts
Hello Sir, I scored 47 in Dec 2015,
While checking on my answers I found especially for question 3 that the answer is completely the opposite to what I answered, yet I’m still confused. The question asked about FIVE potential indicators that Mercury Motoring Co is NOT a going concern. Note that the word “NOT” is in capital letters, so what I wrote is why the company can still be alive business wise. For eg I wrote that the supplier is THREATENING to sue but not ACTUALLY suing. I also talked about current ration falling to 0.9 for a first time which is not so alarming as it’s not an acid ratio there might be reasons like inventory etc, I also suggested an extension facility from the bank. To sum up, I tried to find all the positive things for which the company might still fare well and have a chance not to collapse. However on seeing the ACCA answer I was shocked to see that the answers are all geared towards a going concern perspective which means that it answers in fact the question that Mercury Motoring Co is a going concern (without the NOT), I would appreciate your comments on this.
The question asked you to identify factors indicating why the company was NOT a going concern ie why it was unlikely to survive in the foreseeable future. It did not ask you to decide whether or not it was a going concern.
The question did not ask for an optimistic interpretation of the position.
If a company is a going concern it is likely to survive ie it is likely to keep going as a business.. If it is not a going concern it is unlikely to survive.
- You must be logged in to reply to this topic.