Question

The going concern assumption of GAAP implies that the firm: __________

a. Will continue to operate and that all assets should be recorded at their cost rather than at their liquidation value.
b. Will continue to operate and its assets should be recorded at historical cost.
c. Is going under and needs to be liquidated at historical cost.
d. Is going under and needs to be liquidated at liquidation value.

Answer 1

correct option is (a)

Step-by-step explanation:

• Anxiety is a financially stable accounting term for a company to fulfill its obligations and continue its business for the future.
• So, One of the key assumptions under GAAP is the going concern assumption that will continue to operate and that all assets should be recorded at their cost rather than at their liquidation value