If a company has declared bankruptcy, its financial statements likely violate:
A) The fair value measurement approach.
B) The present value measurement approach.
C) The stable monetary unit assumption.
D) The going concern assumption.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that the company will continue to operate in the foreseeable future. However, if a company has declared bankruptcy, it indicates that it may not be able to continue operating as a going concern. Therefore, the financial statements of a bankrupt company would violate the going concern assumption.

If a Company Has Declared Bankruptcy, Its Financial Statements Likely