Going concern
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Assumption that an entity will continue operations for the foreseeable future.
Going concern in plain English
"Going concern" is the everyday assumption that a business will still be open and running for the foreseeable future — it isn't about to shut down and sell everything off. This matters because it shapes how you record things: a company that plans to keep operating can list a delivery truck at its useful value, while one about to close would have to value everything at fire-sale prices. It's like the difference between a home you plan to live in for years versus one you're listing for a quick sale tomorrow — same house, very different way of thinking about its worth. Unless there's real evidence a company is in trouble, accountants just assume it will carry on.
Practice Going concern
Which of the following is true regarding the 'Going Concern' assumption?
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