Question

Catastrophe Corp. has determined it is not a going concern, and will likely go bankrupt. Which basis of accounting will Catastrophe adopt?

Answer 1

Liquidation Basis.

Step-by-step explanation:

When an organization has found out that it is not a going concern and will go bankrupt in the coming future, then the only basis of accounting that is left with the organization or an entity is to adopt Liquidation. Liquidation helps the organization to meet its various obligations that include clearing of dues and paying of taxes during the time of the bankruptcy of an organization.