Question

Going concern concept assumes that____________________.

• A. The business entity would continue to operate independent of the life of the proprietor/owner
• B. Duration of the business is limited to the life span of the owner/proprietor
• C. Life of the business is defined by the contractual agreement
• D. Business is for short term

Answer 1

The correct option is A The business entity would continue to operate independent of the life of the proprietor/owner

The basic accounting concepts are referred to as the fundamental ideas or basic assumptions underlying the theory and practice of financial accounting and are broad working rules for all accounting activities developed by the accounting profession.

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.