The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:
A) Going-concern assumption.
B) Business entity assumption.
C) Objectivity principle.
D) Cost Principle.
E) Monetary unit assumption.

Question

Quizplus · Accepted Answer

The rule described in the question is the going-concern assumption. This assumption requires financial statements to reflect the belief that the business will continue operating instead of being closed or sold, unless there is evidence to the contrary.

The Rule That Requires Financial Statements to Reflect the Assumption