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Going concern principle

23/10/18 Going concern principle


The going concern principle is the assumption that an entity has the resources needed to continue operating and, therefore, will remain in business for the foreseeable future. An entity is assumed to be a going concern in the absence of significant information to the contrary.

This term also refers to a company’s ability to make enough money to stay afloat or avoid bankruptcy. If a business is not a going concern, it means it’s gone bankrupt and its assets were liquidated.
The expression “going concern” is used as a noun.

For example:

*They are trying to ensure the long-term interest of owners of going concerns.
*What we’re proposing to do is buy the business as a going concern.

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