The Rule That Requires Financial Statements to Reflect the Assumption

question 232

Multiple Choice

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold,unless evidence shows that it will not continue,is the:

• A)Going-concern assumption.
• B)Business entity assumption.
• C)Objectivity principle.
• D)Measurement (Cost)Principle.
• E)Monetary unit assumption.

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Definitions:

Cost of Equity

The cost of equity refers to the return a company must offer investors to compensate for the risk they undertake by investing in the company's equity.

Dividend Yield

A finance ratio illustrating the yearly dividends paid by a company in comparison to its stock price.

Capital Gains Yield

The dividend growth rate or the rate at which the value of an investment grows.