The Principle Prescribing That Financial Statements Reflect the Assumption That

question 4

Multiple Choice

The principle prescribing that financial statements 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 principle
• B)Business entity principle
• C)Objectivity principle
• D)Cost principle
• E)Monetary unit principle

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Definitions:

Natural Disasters

Natural disasters are severe and unexpected events caused by environmental factors that can cause significant damage and loss of life.

Debt Guarantees

Commitments made to cover the debt obligations of another party in case of payment default, typically provided by a parent company for its subsidiaries or a government for private enterprises.

Contingent Liability

A future financial liability that might occur based on the result of a particular event.

Contingent Liability

A potential financial obligation that may arise in the future, depending on the outcome of a specific event.