Which accounting principle allows businesses to report financial results on an ongoing basis?

The Going Concern Principle is a fundamental accounting concept that assumes a business will continue to operate for the foreseeable future. This principle is critical because it underpins the preparation of financial statements, allowing businesses to record assets and liabilities with the expectation that they will remain in business long enough to realize those assets and settle those liabilities.

When businesses operate under the assumption of going concern, they can create financial statements that reflect their long-term strategies, investments, and liabilities. Without this principle, companies would need to adjust their financial reporting on a liquidation basis, which would depict a vastly different financial picture that may not provide relevant information for stakeholders.

In contrast, the other principles mentioned serve different purposes: the Conservatism Principle encourages caution in financial reporting to avoid overstating income or assets; the Materiality Principle dictates that all material information that could influence the decision-making of users must be disclosed; and the Full Disclosure Principle focuses on providing all necessary information that might affect the understanding of financial statements. While these principles are essential in their own right, they do not specifically address the ongoing operational aspect represented by the Going Concern Principle.