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)Measurement (Cost)Principle.
E)Monetary unit assumption.

Question

Quizplus · Accepted Answer

The going-concern assumption posits that a business will continue operation into the foreseeable future, so financial statements should reflect this by valuing assets at their historical cost, rather than their liquidation value. This is important information for stakeholders to have to make informed decisions about the business's future prospects.

The Rule That Requires Financial Statements to Reflect the Assumption