Financial statements are prepared with the assumption that the company will continue in business for a reasonable period of time in the future (not to exceed one year from the date of the financial statements).

Question

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This assumption is known as the going concern assumption, which states that the company will continue to operate in the future and fulfill its obligations. It is a fundamental concept in accounting, and financial statements are prepared based on this assumption unless there is evidence to the contrary.

Financial Statements Are Prepared with the Assumption That the Company