The continuity (going-concern)assumption of accounting:
A)enables accountants to ignore the effect of inflation in the accounting records.
B)holds that the entity will remain in operation long enough to use its existing assets.
C)maintains that each organization, or section of an organization, stands apart from other organizations and individuals.
D)ensures that accounting records and statements are based on the most reliable data available.

Question

Quizplus · Accepted Answer

The continuity assumption, also known as the going-concern assumption, holds that the entity will remain in operation long enough to use its existing assets. This means that accountants assume a business will not liquidate in the near future and will continue to operate indefinitely. This assumption is important when preparing financial statements, as it allows accountants to value assets and liabilities based on their expected future use rather than their immediate liquidation value.

The Continuity (Going-Concern)assumption of Accounting