Question 7
Accounting Concepts and ConventionsThe concept of going concern implies that:
I. Assets are valued at cost, not market value
II. The business will continue operating indefinitely
III. Depreciation must be charged on fixed assets
IV. All liabilities must be paid immediately
- A.I and IV only
- B.I, II and III only
- C.II and III only
- D.All of the above
Show the answer and explanation
Answer: B (I, II and III only)
Explanation
Because the business is expected to carry on, assets are kept at cost and depreciated over their lives; liabilities need not be settled at once.