These rules were established by the Financial Accounting Standards Board.
The first principle is the entity concept which is the group or organization such as a hospital, medical school, or nursing home. Inother words, it separates the business from its owners and treats it as an economic unit. Only assets, liabilities, and owner's equity related to the group or organization are on one financial statement. If there are sub entities, the financial records of these entities are maintained separately.
The second principle is the going - concern concept which is a presumption that the group or organization will be running in the future and will not be liquidated in the next 12 months. It is a very concept in case of healthcare business because hospitals, nursing homes, etc. which do not intend to stay in business the net realizable value of the asset may be not ascertained and could be sold at a much higher price than they worth at the moment of sale. ...Show more