A company is considered a Going Concern when it:

A company is considered a Going Concern when it:

• A. Is providing proof of expenditures for financial statements.
• B. Is stable, able to operate and able to meet its financial obligations.
• C. Is losing money and access to credit.
• D. Is unable to meet its short-term obligations.

Answer: (B)

The Going Concern assumption in accounting means the business is expected to continue operating for the foreseeable future and can meet its financial obligations as they come due. That’s why the description focusing on stability, the ability to operate, and the ability to meet financial obligations best fits going concern. If a company were losing money or unable to meet short‑term obligations, or if it were merely proving expenditures, those situations signal distress and would undermine the idea that the business will continue, which is why those options don’t describe going concern.

The Going Concern assumption in accounting means the business is expected to continue operating for the foreseeable future and can meet its financial obligations as they come due. That’s why the description focusing on stability, the ability to operate, and the ability to meet financial obligations best fits going concern. If a company were losing money or unable to meet short‑term obligations, or if it were merely proving expenditures, those situations signal distress and would undermine the idea that the business will continue, which is why those options don’t describe going concern.