When Preparing Financial Statements,the Accountant Assumes That the Business Will

question 32

True/False

When preparing financial statements,the accountant assumes that the business will continue to operate for at least 5 years,unless there is evidence to the contrary.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents.

Sale of Land

A financial transaction involving the transfer of ownership of real estate property from one party to another.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset, reducing its original cost to its current book value over time.

Indirect Method

A cash flow statement approach that starts with net income and adjusts for changes in balance sheet accounts to reconcile to cash generated by operating activities.