The state legislature is currently debating a bill that, if passed, would require the Sandiken Company to go out of business.Which of the following principles or assumptions related to the preparation of Sandiken's financial statements is most directly affected by this impending vote of the legislature?
A)going concern
B)verifiability principle
C)entity concept
D)materiality concept

Question

Quizplus · Accepted Answer

The going concern principle assumes that the company will be able to continue operating in the foreseeable future. If the legislature passes the bill requiring Sandiken to go out of business, it would directly impact the company's ability to continue as a going concern and would need to be reflected in its financial statements.

The State Legislature Is Currently Debating a Bill That, If