5 Questions
What is the accounting term for a business that is assumed to meet its financial obligations?
A going concern.
How long is the foreseeable future typically regarded as when determining a going concern?
At least the next 12 months or the specified accounting period (the longer of the two).
What does the presumption of going concern for a business imply?
The basic declaration of intention to keep operating its activities for at least the next year.
When is the continuation of an entity as a going concern presumed as the basis for financial reporting?
Unless and until the entity's liquidation becomes imminent.
What is the term commonly used for the preparation of financial statements under the presumption of going concern?
The going concern basis of accounting.
Test your knowledge on the concept of going concern in accounting, which refers to a business's ability to meet its financial obligations in the foreseeable future without the threat of liquidation. Understand the implications and criteria for determining a going concern.
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