Going Concern

Going Concern is an accounting principle assuming that a business will continue its operations for the foreseeable future and has neither the intention nor necessity to liquidate or significantly curtail its activities.

When preparing financial statements under this assumption:

• Assets are valued at historical cost rather than liquidation value

• Liabilities are reported based on contractual obligations

• Long-term plans and investments remain reflected as viable

If substantial doubt arises regarding a company’s ability to continue as a going concern — often flagged by cash flow deficits, creditor defaults, or operational shutdowns — auditors are required to disclose this explicitly, as it significantly alters valuation, funding, and strategic options.