Question

Which of the following statement(s) is/are correct?

Statement 1: The Going Concern Concept assumes that a business will not cease operations in the near future.

Statement 2: The Business Entity Concept implies that the business and its owner are separate entities, and the owner's personal transactions should be recorded in the business books.

Options

• Only Statement 1 is correct.

• Only Statement 2 is correct.

• Both Statements 1 and 2 are correct.

• Both Statements 1 and 2 are false.

Answer 1

Only Statement 1 is correct.

Explanation:

The Going Concern Concept is a fundamental accounting assumption that implies a company will continue to operate indefinitely and will not be closed or liquidated in the foreseeable future.