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Question
As per ________ business transactions are recorded on the assumption that the business will continue for a long-time.
As per ________ business transactions are recorded on the assumption that the business will continue for a long-time.
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Solution
The correct option is D Going concern concept
The concept of going concern assumes that a business firm
would continue to carry out its operations indefinitely, i.e. for a fairly long
period of time and would not be liquidated in the foreseeable future.
This is
an important assumption of accounting as it provides the very basis for showing
the value of assets in the balance sheet.
Conversely, this means the entity
will not be forced to halt operations and liquidate its assets in the near term at what
may be low fire-sale prices.
The concept of going concern assumes that a business firm would continue to carry out its operations indefinitely, i.e. for a fairly long period of time and would not be liquidated in the foreseeable future.
This is an important assumption of accounting as it provides the very basis for showing the value of assets in the balance sheet.
Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be low fire-sale prices.
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