Definition of Going concern:
A business that is operating and making a profit.
Currently operating business that is expected to continue to function as such and remain viable in the foreseeable future.
Going concern is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary. This term also refers to a company's ability to make enough money to stay afloat or to avoid bankruptcy. If a business is not a going concern, it means it's gone bankrupt and its assets were liquidated. As an example, many dot-coms are no longer going concern companies after the tech bust in the late 1990s.
Accountants use going concern principles to decide what types of reporting should appear on financial statements. Companies that are a going concern may defer reporting long-term assets at current value or liquidating value, but rather at cost. A company remains a going concern when the sale of assets does not impair its ability to continue operation, such as the closure of a small branch office that reassigns the employees to other departments within the company.
How to use Going concern in a sentence?
- Negative trends that lead to no longer being a going concern include denial of credit, continued losses, and lawsuits.
- Trying to sell the business as a going concern.
- Certain expenses and assets may be deferred in financial reports if a company is assumed to be a going concern.
- Sometimes you may have a going concern and you will have to come up with new ideas of how to fix it.
- If you are thinking about purchasing another company you should figure out if it is a going concern and sustainable.
- Going concern is an accounting term for a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future.
- If a company is no longer a going concern, it must start reporting certain information on its financial statements.
- We operated with a going concern principle as we focused on sustainable business practices and we were thinking long term.
Meaning of Going concern & Going concern Definition