Going Concern Assumption - QS Study
QS Study

Going Concern Assumption

As per this assumption, the business will be present for a lengthy period and transactions are recorded from this point of view. There is neither the purpose nor the requirement to wind up the business in the probable future. It’s significant because it shows the shareholders the economic constancy of the business, which will involve stock price, and because the financial statements are organized around the assumption that the entity is a going concern.

Going concern is a essential principal assumption in accounting. The assumption is that a business or other entity will be able to maintain operating for a period of time that is adequate to carry out its assurances, requirements, purposes, and so on. In other words, the company will not have to liquidate or be forced out of business in the probable future. By making this assumption, the accountant is reasonable in deferring the recognition of convinced expenses until a later period, when the entity will most probably still be in business and using its assets in the most helpful method feasible.