The assumption that relates to the entity continuing in business for the foreseeable future is called _______.
A)the entity assumption
B)the going concern assumption
C)the solvency assumption
D)the liquidity assumption

Question

Quizplus · Accepted Answer

The assumption that relates to the entity continuing in business for the foreseeable future is called the going concern assumption. This assumption is important in accounting because it enables the use of historical cost accounting, which assumes that the business will continue to operate in the future and therefore, assets can be recorded at their original cost rather than at their current market value. This assumption allows for more accurate financial statements and helps users make better business decisions.

The Assumption That Relates to the Entity Continuing in Business