Under the going concern assumption:
A) an entity is viewed as not likely to continue in operation for the foreseeable future.
B) an entity's assets and liabilities are recorded at liquidation values.
C) an entity is viewed as continuing in business for the foreseeable future.
D) an entity is considered to be a separate legal entity from its owners.

Question

Quizplus · Accepted Answer

Under the going concern assumption, an entity is viewed as continuing in business for the foreseeable future. This assumption guides the preparation of financial statements and assumes that the business will continue to operate and meet its obligations in the future. This allows for the assets and liabilities to be recorded at their normal values rather than at liquidation values. Option A is incorrect because it contradicts the very assumption of going concern. Option B is partially correct, but it does not reflect the full implications of the going concern assumption. Option D is not related to the going concern assumption but rather the concept of a separate legal entity.

Under the Going Concern Assumption