Question

Which basic assumption may not be followed when a firm in bankruptcy reports financial results?

Answer 1

Answer:

The correct answer is d. Going concern assumption .

Explanation:

The ongoing business is an accounting term for a company with the necessary resources to continue operating without the threat of a liquidation in the foreseeable future, generally considered as at least within twelve months. It implies for the business the declaration of intention to continue with its activities at least during the next year.

This is a basic hypothesis to prepare your financial statements, which means that the company has no need or intention to liquidate or actually reduce its operations. This term also refers to a company's ability to earn enough money to stay afloat or avoid bankruptcy.