The Going Concern Assumption Is Made When It Is Believed

question 33

Multiple Choice

The going concern assumption is made when it is believed that:

• A) A company will become insolvent within the next accounting period.
• B) The board of directors does not believe the company's financial statements are fairly presented.
• C) A company will remain in business for the foreseeable future.
• D) A company is a separate legal entity.

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Definitions:

Weighted Average

This is an average in which each quantity to be averaged is assigned a weight, reflecting its importance.

Variances

Statistical measures that represent the degree of spread or dispersion of a set of values around their mean, commonly used to quantify risk in finance.

Covariances

Indicators of how two or more variables are related and move together.

Capital Allocation Line

A graph line that shows the risk-return trade-off for efficient portfolios, indicating the rate of return for each unit of risk.