It is "reasonable" to assume the going-concern assumption for financial reporting when the degree of doubt is no higher than ________.
A)50%
B)80%
C)20%
D)10%

Question

Quizplus · Accepted Answer

The going-concern assumption assumes that a company will continue to operate in the foreseeable future. It is reasonable to make this assumption when there is no higher than a 20% degree of doubt that the company will not be able to continue operating. This means that the probability of the company shutting down or going bankrupt is not high enough to cast doubt on its ability to continue operating. Therefore, choice C (20%) is the best answer.

It Is "Reasonable" to Assume the Going-Concern Assumption for Financial