The "going concern" concept states that:
A) a business has an existence that is separate from its owner.
B) accounting information must be useful to the owners and managers of businesses.
C) the premise of revenue and expense are a part of business.
D) a successful business will stay in business.

Question

Quizplus · Accepted Answer

The "going concern" concept states that a successful business will continue its operations in the foreseeable future. It is an assumption made by accountants while preparing financial statements that the business will continue its operations for the foreseeable future, and, thus, the assets and liabilities should be recorded accordingly. Option A is incorrect because it is a statement about the separate legal existence of a business. Option B is incorrect because accounting information must be useful for various stakeholders, not just owners and managers. Option C is incorrect because revenue and expense recognition are accounting conventions and not the premise of business.

The "Going Concern" Concept States That