Going Concern Principle in Accounting

Steps:

• Recall that the going concern principle is a fundamental accounting assumption stating businesses operate indefinitely without liquidation intent.
• Review choices to identify the one matching this assumption of ongoing operations.
• Eliminate options describing other principles like consistency, revenue recognition, or entity separation.
• Confirm B directly aligns with the principle's core idea.

Why B is correct:

• The going concern principle, per GAAP and IFRS, assumes the entity will remain in operation for the foreseeable future, allowing assets and liabilities to be valued at historical cost rather than liquidation value.

Why the others are wrong:

• A describes the consistency principle, requiring uniform accounting methods across periods.
• C describes the revenue recognition principle under accrual accounting.
• D describes the economic entity principle, separating business from owner transactions.

Final answer: B