Definition of Going Concern

Going concern assumption says that the entity should be preparing its financial statements ongoing concern basis if there are not any conditions that suggest otherwise. An entity is assumed to be a going concern when it is reasonably certain that the entity can continue its operations for the foreseeable future.


When an entity is facing circumstances that can affect the operations of the entity adversely and there can be a doubt about the entity’s ability to continue as a going concern the entity should be preparing the financial statements on the breakup bases. It is the auditor’s responsibility to identify circumstances in the planning stage.



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