Match the descriptions listed in letters a through e below with the proper assumption numbered from below.
-Going concern assumption
A) The economic life of an entity can be divided into time periods.
B) The financial statements should contain transactions related to only the business and not the individual owners.
C) Purchasing power of money is constant over time.
D) The dollar value attached to an item on a company's balance sheet is determined by the market in which the company operates.
E) Life of the entity is indefinite.

Question

Quizplus · Accepted Answer

The going concern assumption is based on the idea that an entity will continue to operate indefinitely, not planning or needing to liquidate its assets. This assumption underlies the preparation of financial statements, as it affects the valuation of assets and liabilities.

Match the Descriptions Listed in Letters a Through E Below