Why Is the Continuity Assumption Important with Respect to the Accounting

question 4

Multiple Choice

Why is the continuity assumption important with respect to the accounting for long-lived tangible assets?

• A)It helps a company decide whether to use straight-line depreciation or an accelerated depreciation method.
• B)It justifies depreciating the asset over its expected useful life, without anticipating that the business will liquidate in the near future.
• C)It provides justification for including residual values in calculating depreciation.
• D)It is consistent with maintaining assets in the accounting records at market value rather than acquisition cost.

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Definitions:

Nursing Home Reform Act

Legislation aiming to improve the quality of care in long-term residential facilities by setting federal standards for how care should be provided to residents.

Resident Assessment Instrument

A standardized approach used in healthcare settings to assess and plan care for residents, particularly in long-term care facilities.

Universal Health Care Policy

A health care system in which all residents of a particular country or region are assured access to health care services, often through government support.

Restorative Care Setting

A healthcare environment focused on rehabilitation and recovery, aiming to maximize independence and functionality post-injury or illness.