The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Multiple Choice

Periodicity assumption.

Entity assumption

Going concern assumption.

Historical cost assumption.

Answer:

The assumption that in the absence of contrary information, a business entity will continue indefinitely is the going concern Assumption.

option is C.

As per Going concern concept it is assumed that a business firm would continue to carry out its operations indefinitely i.e. for a fairly long period of time and would not be liquidated int the foreseeable future. The transactions are recorded in the books of the business on the assumption that it is continuing enterprises. It is on the basis of this concept that fixed assets are recorded in the books at their original costs and depreciation is charged on the assets without reference to their market value. Without this concept, the classification of current and fixed assets and short and long term liabilities cannot be made.