When Management Plans the Sale or Liquidation of an Entity

question 27

Multiple Choice

When management plans the sale or liquidation of an entity, the going concern assumption is set aside and the financial statements are prepared on the:

• A) accrual basis
• B) cash basis
• C) basis of estimated sales or liquidation values
• D) basis of estimated expenses

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Definitions:

Current Liability

Obligations that a company is expected to pay off within the coming year or its operational cycle, whichever is longer.

Non-current

Term used to describe assets or liabilities that are not expected to turn into cash, be consumed, or paid within one year or the operating cycle, whichever is longer.

Instalment Payments

Payments made periodically towards the settlement of a debt or purchase price, typically including interest.