The accounting assumption that a business will continue to operate into the foreseeable future is the:
A) going concern assumption.
B) accounting period assumption.
C) entity assumption.
D) historical cost assumption.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that the business will continue to operate into the foreseeable future, which is important because it affects the way assets and liabilities are reported on the balance sheet. The accounting period assumption assumes that the business's financial statements are prepared for a specific period of time, such as a month, quarter, or year. The entity assumption assumes that the business's financial activities are separate from those of its owners or other businesses. The historical cost assumption assumes that assets are recorded at their original cost, rather than their current market value.

The Accounting Assumption That a Business Will Continue to Operate