Going Concern

What is Going Concern?

The Going Concern principle is an underlying assumption in accounting which states that a company will continue its operations indefinitely and is not planning to liquidate or significantly curtail its business in the near future. This assumption underpins the preparation of financial statements, enabling companies to defer recognizing certain expenses and revenues until future periods.

Short Description: An accounting principle that assumes a company will continue its operations into the foreseeable future without the intention or need to liquidate.

• Financial Stability: Indicates a company is financially stable and expects to remain in business.
• Financial Reporting: Influences the timing of asset valuations, depreciation, and other financial reporting practices.
• Assumption Validity: Auditors must evaluate the appropriateness of this assumption based on company operations and industry conditions.

This concept is crucial for reflecting a company's true financial health and ensuring stakeholders' trust in its ability to maintain operations over time.