The going concern assumption is made when it is believed that:
A) A company will become insolvent within the next accounting period.
B) The board of directors does not believe the company's financial statements are fairly presented.
C) A company will remain in business for the foreseeable future.
D) A company is a separate legal entity.

Question

Quizplus · Accepted Answer

The going concern assumption is made when it is believed that a company will remain in business for the foreseeable future. This assumption is important because it allows financial statements to be prepared on the basis that the company will continue to operate and fulfill its obligations. If the assumption is not valid, it may require adjustments to the financial statements, such as the recognition of impairment losses or disclosures about the company's ability to continue as a going concern.

The Going Concern Assumption Is Made When It Is Believed