The going concern concept is an important accounting principle stating that a business is expected to continue its operations for the foreseeable future. This means the company has no intention or need to liquidate or significantly scale back its activities. The going concern principle is the assumption that an entity will remain in business for the foreseeable future, which justifies the deferral of some expenses. Going concern is an accounting term for a company that is financially stable and can continue operating for at least 12 months. Learn how accountants use going concern principles to report assets, expenses, and liabilities, and what red flags indicate a company is not a going concern. What is Going Concern Concept Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason. In other words, a going concern is expected to have the following things working in their favour: The business is capable of running the daily operations and has capital and raw materials to do so. A business has the ability to pay ...
