The assumption which assumes that the entity is able to pay its debts when they fall due for the near future is the:
A) reliability.
B) going concern.
C) accounting entity.
D) accrual basis.

Question

Quizplus · Accepted Answer

The going concern assumption is the assumption that a business entity will continue to operate indefinitely, without the need for liquidation or bankruptcy, and will have sufficient resources to meet its obligations as they become due. This assumption is important because it allows financial statements to be prepared on a basis that assumes the entity will continue to operate in the foreseeable future, which is necessary for meaningful analysis and decision-making by users of financial information.

The Assumption Which Assumes That the Entity Is Able to Pay