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Going Concern Concept Quiz

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Questions and Answers

True or false: The Going Concern concept assumes that a business enterprise will cease to exist in the near future.

False

True or false: The Going Concern concept is not concerned with the continuity of a business enterprise.

False

True or false: The Going Concern concept assumes that a business enterprise will continue in existence for a long period of time.

True

What is the primary assumption of the Going Concern concept?

The business enterprise will continue in existence for a long enough period of time to carry out its objectives and commitments Signup and view all the answers

What does the Going Concern concept assume about the life of a business enterprise?

The life is indefinite Signup and view all the answers

Why is the Going Concern concept important for financial reporting?

It ensures that financial statements are prepared with the assumption that the business will continue operating Signup and view all the answers

Study Notes

Going Concern Concept

The Going Concern concept assumes that a business enterprise will continue in existence for a long period of time.
This concept is concerned with the continuity of a business enterprise.
The primary assumption of the Going Concern concept is that a business will continue to operate for a foreseeable future.
The Going Concern concept assumes that a business enterprise will have a long life, rather than ceasing to exist in the near future.
This concept is important for financial reporting because it allows companies to prepare financial statements on the basis that they will remain in operation, rather than liquidating their assets.

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Description

Test your understanding of the going concern concept with this quiz. Assess your knowledge of the assumption that a business will continue to operate for an indefinite period, fulfilling its objectives and obligations.