Question

The concept which states that business operations will continue for ever is known as _____________.

• A. Going Concern concept
• B. Dual aspect concept
• C. Realization concept
• D. Cost concept

Answer 1

The correct option is A 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.