Day: January 13, 2024

Which of the following definitions for the going concern concept in accounting is the closest to the definition given in IAS 1 Presentation of Financial Statements?

Select ONE answer:

1. The directors do not intend to liquidate the entity or to cease trading in the foreseeable future
2. The entity can pay its debts as and when they fall due
3. The directors expect the entity’s assets to yield future economic benefits
4. Financial statements have been prepared on the assumption that the entity is solvent would be able to pay all creditors in full in the event of being wound-up

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct -IAS 1 paragraph 25, going concern relates to whether the entity will continue in operational existence without liquidating, ceasing trading or being unable to avoid these things
2. Not correct
3. Not correct
4. Not correct

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