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 the company will continue to operate in the foreseeable future. However, in the case of a firm in bankruptcy, this assumption may not hold true, as the company is facing liquidity and solvency issues and may not be able to continue its operations in the future. Therefore, the going concern assumption may not be followed in such cases.

Which Basic Assumption May NOT Be Followed When a Firm