BICA Qualification Practice Questions - BICA Botswana Chartered Accountancy Qualification Exam

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Under IAS 1 Presentation of Financial Statements, what is the primary criterion for determining whether an entity should prepare its financial statements on a going concern basis?

Management has assessed that the entity has neither the intention nor the need to liquidate or cease trading for at least 12 months from the reporting date The entity has generated positive operating cash flows and net accounting profit in the preceding three consecutive financial years An independent external auditor has issued an unqualified audit report confirming financial solvency for the upcoming financial period Total assets exceed total liabilities by at least 25% on the statement of financial position at the reporting date

Correct Answer:

Management has assessed that the entity has neither the intention nor the need to liquidate or cease trading for at least 12 months from the reporting date

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