The Going Concern Assumption Is Not Applied to

question 95

Multiple Choice

The going concern assumption is not applied to

• A) companies that have sustained losses for the previous two years.
• B) companies about to file for bankruptcy.
• C) the partnership form of business.
• D) companies that have been in existence for less than a year.

---

Definitions:

Real Interest Rates

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on savings.

Inflation Adjustments

Modifications made to financial statements or figures to account for the effects of inflation, ensuring values are represented in consistent purchasing power.

Liquidity Risk

The risk that an asset cannot be sold or converted into cash quickly enough to meet short-term financial obligations without a significant loss in value.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental) which pays periodic interest payments and the return of the principal at maturity.