The Rule That Requires Financial Statements to Reflect the Assumption

question 232

Multiple Choice

The rule that requires financial statements to 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 assumption.
• B)Business entity assumption.
• C)Objectivity principle.
• D)Measurement (Cost)Principle.
• E)Monetary unit assumption.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It's an important measure of financial health.

Capital Expenditures

Resources allocated by a business to procure, enhance, and sustain material assets like land, factory structures, or equipment.

Cash Dividends

Payments made out of a corporation's earnings to its shareholders, typically distributed as a fixed amount per share of stock.