The going concern assumption means that a business is expected to:
Correct answer: B. Continue operating for the foreseeable future
- A. Earn a profit in every accounting period
- B. Continue operating for the foreseeable future
- C. Avoid borrowing throughout its existence
- D. Sell all assets at their market values
Explanation
Going concern assumes that the entity will continue its operations for the foreseeable future. It does not guarantee annual profit or prohibit the use of borrowed funds.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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