What is the going concern assumption?
A) Assumes a company will go out of business if it can't pay its bills
B) Assumes that a company will continue to operate indefinitely
C) Assumes that a company will follow proper accounting rules
D) Assumes that a company should continue to use the same accounting principles

Question

Quizplus · Accepted Answer

The going concern assumption is the assumption that a company will continue to operate indefinitely, meaning it is not expected to go out of business in the foreseeable future. This assumption is important in financial reporting because it allows the company to use accrual accounting and report assets and liabilities at their estimated useful lives rather than at their liquidation values.

What Is the Going Concern Assumption