Accounting Concepts – Going-Concern Concept
Definition
The going-concern concept assumes that the business is a going concern until there is evidence to the contrary, so that assets are not stated at their break-up value;
Example
Example 1:
A Lagos supermarket prepares its accounts assuming it will continue operating indefinitely, recording assets at their working value rather than what they’d fetch if the business suddenly closed down.
Example 2:
Marks & Spencer prepares its annual accounts under the going-concern concept, valuing its store fixtures and equipment based on continued use rather than emergency liquidation prices.