A basic assumption that underlies financial reporting is that an entity will continue as a going concern.

Question

Quizplus · Accepted Answer

The going concern assumption is a fundamental principle of accounting and financial reporting, which assumes that entities will continue to operate in the foreseeable future. This assumption helps to provide a basis for assessing the entity's financial position, performance, and cash flow, as well as the value of its assets and liabilities. However, if this assumption is not appropriate, the financial statements may need to be prepared on a different basis, such as liquidation or going concern basis.

A Basic Assumption That Underlies Financial Reporting Is That an Entity