Accounting standards generally require the financial statements to be prepared on the assumption an entity will continue its operations for a reasonable amount of time.

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This assumption is known as the going concern concept, and it is a fundamental principle of accounting. The financial statements are prepared based on the assumption that the entity will continue its operations for the foreseeable future, allowing for the appropriate presentation of assets, liabilities, and equity. If an entity is not expected to continue as a going concern, this must be disclosed in the financial statements.

Accounting Standards Generally Require the Financial Statements to Be Prepared