The going concern assumption implies that: 1. a firm will continue to be in business for the foreseeable future. 2. a firm will be going out of business in the near future. 3. a firm will continue to operate in the near future, but only after being acquired by another firm. 4. none of these.

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Business

Petie

9 August, 18:52

The going concern assumption implies that: 1. a firm will continue to be in business for the foreseeable future. 2. a firm will be going out of business in the near future. 3. a firm will continue to operate in the near future, but only after being acquired by another firm. 4. none of these.

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Francis Stout · Answer 1

A firm will continue to be in business for the foreseeable future (A)

Explanation:

According to the accounting concept, a firm is a going concern if its financial statement (i. e Income Statement, Cash flow Statement and Statement of financial position) and other relevant indicators show that it has the ability to continue in the business in the next 12 months (foreseeable future) and there is no intention to shut-down.

However, if there are indicators that show that the firm can't continue in the operation for the next 12 months, its financial statement should be prepared on break-up basis.