FeelGood Limited has been set up specifically for the building of an inner-city women's refuge. When the building has been erected and becomes operational (estimated time four months), the company will be liquidated. Which basic assumption underlying the preparation of general-purpose financial reports will not apply in preparing the reports for FeelGood Limited?
A) The business entity principle.
B) The principle of duality.
C) The going-concern principle.
D) The period assumption.

Question

Quizplus · Accepted Answer

The going-concern principle assumes that a business will continue to operate indefinitely. However, in the case of FeelGood Limited, the company will only operate for a limited time before being liquidated, so this assumption does not apply.

FeelGood Limited Has Been Set Up Specifically for the Building