The Accounting Principle That Assumes That a Company Will Operate

question 81

Multiple Choice

The accounting principle that assumes that a company will operate in the foreseeable future is:

• A)Going concern.
• B)Objectivity.
• C)Liquidity.
• D)Disclosure.

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Definitions:

Convertible Debt

A type of bond or loan that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often paying fixed dividends.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, including loans, bonds, or credit lines.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.