Which of the following is an implication of the going concern assumption?
A)The historical cost principle is credible.
B)Depreciation and amortization policies are justifiable and appropriate.
C)The current-noncurrent classification of assets and liabilities is justifiable and signify-cant.
D)All of these.

Question

Quizplus · Accepted Answer

The going concern assumption implies that the entity will continue to operate for the foreseeable future, which justifies the use of historical cost principle as it assumes that the value of assets and liabilities remain unchanged unless there is evidence to the contrary. Also, depreciation and amortization policies are appropriate as the assumption of continuity justifies spreading the cost of a long-lived asset over its useful life. Lastly, the current-noncurrent classification of assets and liabilities is significant as it assumes that the entity will continue to operate for the foreseeable future and allows for proper classification of assets and liabilities based on their expected realization or settlement dates.

Which of the Following Is an Implication of the Going