The Going Concern Assumption Is Concerned with

question 22

Multiple Choice

The going concern assumption is concerned with

• A)The company's ability to continue operations long enough to carry out its existing obligations.
• B)Any information that is capable of influencing the decisions of anyone using the financial statements.
• C)Measuring ongoing business activities at their exchange price at the time of the initial external transaction.
• D)offsetting management's natural optimism by providing a prudent approach to uncertainty in financial statement items.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing the difference between its cost and salvage value evenly over its useful life.

Capital Budgeting

involves the evaluation and selection of long-term investments that are in line with the goal of maximizing the value of a firm.

Incremental Sales

The additional sales generated by a particular business action or decision, reflecting the net increase in sales due to that specific activity.

Operating Expenses

Expenses that relate to the day-to-day operations of a business, excluding costs associated with the production of goods.