If the Ascot Health Plan's Accountants Follow the Going-Concern Concept

question 7

Multiple Choice

If the Ascot health plan's accountants follow the going-concern concept under GAAP, then these accountants most likely

• A) Assume that Ascot will pay its liabilities immediately or in full during the current accounting period
• B) Defer certain costs that Ascot has incurred, unless these costs contribute to the health plan's future earnings
• C) Assume that Ascot is not about to be liquidated, unless there is evidence to the contrary
• D) Value Ascot's assets more conservatively than they would under SAP

---

Definitions:

Service Company

A service company is a business that earns revenue through the provision of services, as opposed to selling physical products.

Merchandise Company

A business that purchases and sells goods, often retail or wholesale, as its primary activity.

Form 1120S

A tax document used in the United States to report the earnings, losses, and dividends of S corporation shareholders.

Corporation

A legal entity that is separate and distinct from its owners. Corporations can own property, incur debts, sue, and be sued.