The going concern assumption:
A) Means that we can express transactions and events in monetary, or money, units.
B) Means that a business is accounted for separately from other business entities, including its owner.
C) Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

Question

Quizplus · Accepted Answer

The going concern assumption states that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. This assumption is important in financial reporting as it allows companies to prepare financial statements under the assumption of continuing operations, which is necessary for effective financial analysis and decision-making.

The Going Concern Assumption