Which basic assumption may not be followed when a firm in bankruptcy reports financial results?
A) Economic entity assumption.
B) Going concern assumption.
C) Periodicity assumption.
D) Monetary unit assumption.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that a company will continue to operate in the foreseeable future. However, when a firm is in bankruptcy, it is not certain if it will continue to operate or if it will be liquidated, which means that the going concern assumption may not be followed.

Which Basic Assumption May Not Be Followed When a Firm