synthesis
Bankruptcy: Its Prediction and Accounting Indicators
One major assumption in accounting is the Going Concern. It states that an accounting entity is viewed as continuing in operation indefinitely, thus, financial statements are normally prepared in the assumption that the entity will continue its operations for the forseeable future. But then it is inevitable that one shall come to an end. So if there is evidence that the entity’s operations are to be terminated, the going concern assumption is abandoned. There are several reasons behind the cessation of an entity’s operations. Bankruptcy is one of them. Predicting bankruptcy is of essence to a business. As much as possible, a business will do everything just to escape bankruptcy and to still continue the normal operations of the business. The owners, management, the accountants, auditors, and everyone who has interest in the business should be aware of the different factors and indicators of a near-bankruptcy.
After the high-profile corporate collapses in 2001, bankruptcy and accounting fraud became critical issues that should be addressed in the corporate world. This led the researcher to the topic Bankruptcy: Its Prediction and Accounting Indicators. The story of Enron is what made the researcher very interested in the topic. The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure.
Young as I am, I dreamt of putting up my own business and investing in capital markets. It is important that I should learn everything that may occur in a business, may it be positive or negative. And when the time comes that my own business shall experience
One major assumption in accounting is the Going Concern. It states that an accounting entity is viewed as continuing in operation indefinitely, thus, financial statements are normally prepared in the assumption that the entity will continue its operations for the forseeable future. But then it is inevitable that one shall come to an end. So if there is evidence that the entity’s operations are to be terminated, the going concern assumption is abandoned. There are several reasons behind the cessation of an entity’s operations. Bankruptcy is one of them. Predicting bankruptcy is of essence to a business. As much as possible, a business will do everything just to escape bankruptcy and to still continue the normal operations of the business. The owners, management, the accountants, auditors, and everyone who has interest in the business should be aware of the different factors and indicators of a near-bankruptcy.
After the high-profile corporate collapses in 2001, bankruptcy and accounting fraud became critical issues that should be addressed in the corporate world. This led the researcher to the topic Bankruptcy: Its Prediction and Accounting Indicators. The story of Enron is what made the researcher very interested in the topic. The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure.
Young as I am, I dreamt of putting up my own business and investing in capital markets. It is important that I should learn everything that may occur in a business, may it be positive or negative. And when the time comes that my own business shall experience