The going concern or continuity assumption is critical to financial accounting. The assumption
A) Is always maintained for all firms for all years.
B) Supports the use of historical cost valuation for assets rather than market values.
C) Means that a corporation has a definite ending date.
D) Requires that we immediately expense prepaid accounts because they do not represent a future cash inflow.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that a business will continue to operate in the foreseeable future, which supports the use of historical cost valuation for assets rather than market values. It is not always maintained for all firms for all years, does not mean that a corporation has a definite ending date, and does not require the immediate expensing of prepaid accounts because they do represent a future cash inflow.

The Going Concern or Continuity Assumption Is Critical to Financial