If a company has gone bankrupt, its financial statements likely violate:
A)The matching principle.
B)The realization principle.
C)The stable monetary unit assumption.
D)The going concern assumption.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that a company will continue to operate and meet its financial obligations in the foreseeable future. If a company has gone bankrupt, it means that it has failed to meet its financial obligations and is no longer going concern. Therefore, the financial statements produced after the bankruptcy no longer adhere to the going concern assumption.

If a Company Has Gone Bankrupt, Its Financial Statements Likely