Whenever any business organization sets off, it is taken for granted that it would be continued for an indefinite period of time, incurring high profits. However, there may arise glitches in between that may result in its loss of production.
Keeping those negative aspects at bay, in case of any business organization, before functioning, buys its set of assets and capital. It is this concept of indefinite production that has resulted in buying of these products rather than hiring them.
As per the International Accounting Standard, it is taken that every business institution has the capacity to function in the long run. It is based on this that policies and organization of the business are framed and assets, liabilities, expenses and revenue amount is calculated.
It is this aspect of moving forth that is associated with every business unit.