The Continuity Assumption Holds That the Entity Will Continue in Business

question 53

True/False

The continuity assumption holds that the entity will continue in business for the foreseeable future but it does not mean that it will be a going concern forever.

---

Definitions:

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of its assets and earnings.

Target Capital Structure

The optimal mix of debt, equity, and other securities that a firm aims to maintain for funding its operations.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment.

Without Paying

Referring to a situation or action where no monetary exchange is required to obtain a good or service.