Match each of the following statements to the best qualitative characteristic or underlying assumption of accounting information that should be considered. Each answer is used only once.
-Going concern
A) Although several accounting methods are acceptable, company management chooses a single method and follows that each year.
B) The company's accountant ignores a $1.60 error in recording an invoice, discovered after the final financial statements were prepared.
C) The accountant estimates the value of accounts receivable, based on recent information about economic forecasts and prior collection trends applicable to the company.
D) Before each board meeting, the company prepares a number of reports that are time-consuming and expensive that are never used.
E) In estimating the life of a new piece of equipment, the accounting department assumes that the business will last indefinitely. F. George Bush, a stockholder of Halliburton, owes a debt to Union Bank for $3,000. This $3,000 is not a debt of Halliburton.

Question

Quizplus · Accepted Answer

E is correct because the assumption that the business will last indefinitely directly relates to the going concern assumption, which assumes that the business will continue to operate for the foreseeable future, not liquidate or significantly curtail its operations.

Match Each of the Following Statements to the Best Qualitative