CIMA BA3 · Chapter 2 · Question 3 of 8
Financial statements are normally prepared on the assumption that the entity will continue in operation for the foreseeable future. Which concept is this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Going concern
Explanation
This is the going concern assumption. If the entity intends or needs to liquidate or cease trading, the financial statements may have to be prepared on a different basis, such as a break-up basis, and that basis must be disclosed.
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