Going Concern Assessment:

A going concern assessment is an evaluation conducted by auditors to assess an entity's ability to continue its operations for the foreseeable future, typically for the next twelve months from the balance sheet date. This assessment is crucial in financial reporting because it determines whether financial statements should be prepared under the going concern assumption, which assumes that the entity will remain in operation for the foreseeable future and can meet its obligations as they become due. Auditors consider various factors, such as historical financial performance, liquidity, cash flow projections, financing arrangements, and industry conditions, to determine whether there are material uncertainties that may cast significant doubt on the entity's ability to continue as a going concern. If such uncertainties exist, auditors may issue a qualified or adverse opinion in their audit report, alerting stakeholders to the risks associated with the entity's viability.

Objective Question:

Which term refers to the evaluation conducted by auditors to assess an entity's ability to continue its operations for the foreseeable future?

A$)$ Liquidation assessment

B$)$ Solvency analysis

C$)$ Going concern assessment

D$)$ Profitability evaluation