The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:
A) Objectivity principle.
B) Monetary unit assumption.
C) Business entity assumption.
D) Going-concern assumption.
E) Measurement (Cost) Principle.

Question

Quizplus · Accepted Answer

The going-concern assumption is the rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue. This assumption is essential for financial statement users to make informed decisions about the company's future prospects.

The Rule That Requires Financial Statements to Reflect the Assumption