The accounting assumption that a business will continue indefinitely is called what?

• A. Objective evidence
• B. Cost
• C. Going concern
• D. Materiality

Answer: (C)

The going concern assumption means financial statements are prepared assuming the business will continue operating for the foreseeable future. This perspective lets assets be valued based on their ongoing use (for example, using depreciation over useful lives rather than assuming they’ll be sold off for liquidation) and allows normal accrual accounting for revenues and expenses. If a business were not expected to continue, valuation and presentation would shift to liquidation values and different timing, which shows why this assumption is essential to standard accounting practice. The other terms—objective evidence relates to verifiability of information, cost refers to how assets are measured, and materiality is about whether items are significant to users’ decisions—do not describe the ongoing, long-term operation concept.