Which Accounting Assumption or Principle Is Being Violated If a Company

question 56

Multiple Choice

Which accounting assumption or principle is being violated if a company is a party to major litigation that it may lose and decides not to include the information in the financial statements because it may have a negative impact on the company's stock price?

• A) Full disclosure.
• B) Going concern.
• C) Historical cost.
• D) Expense recognition.

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Definitions:

Logical

Pertaining to reasoning or the application of strict principles of validity in reasoning, often used in the context of logical deduction or argumentation.

Unobserved

Not seen or noticed, often referring to variables or factors that have not been measured or accounted for in a study or experiment.

Foundation

The basis or groundwork of an idea, structure, or theory from which further growth, development, or understanding can occur.

Sequence

An ordered list of numbers or events where each member has a specific position.