Asked by Kristie Smith on Jul 26, 2024
Verified
Which of the following statements about the going concern assumption is not true?
A) it can justify the use of historical costs when measuring non-current assets.
B) it supports the use of assets such as Prepaid Expenses.
C) it supports the systematic allocation of depreciation over an asset's useful life.
D) it is used when an entity goes into liquidation.
Going Concern Assumption
The assumption that the entity will continue to operate for the foreseeable future.
Historical Costs
The original monetary value at which an asset was bought or a liability was incurred.
Liquidation
The process of closing a business, selling its assets, and using the proceeds to pay creditors, with any leftovers distributed to shareholders.
- Familiarize oneself with the purposes and instructions outlined in the Conceptual Framework for Financial Reporting.
Verified Answer
LH
lynnique henryJul 27, 2024
Final Answer :
D
Explanation :
The going concern assumption assumes that the entity will continue to operate in the foreseeable future, and therefore going into liquidation contradicts this assumption.
Learning Objectives
- Familiarize oneself with the purposes and instructions outlined in the Conceptual Framework for Financial Reporting.
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