Going concern principle

The going concern principle is the assumption that a business is a going concern has a profound impact on how a balance sheet is drawn up, and it is one of the fundamental principles of accounting (like the accrual principle). It justifies using a book value based on historical cost less depreciation, rather than, for example, re-sale value.

The term is also likely to be used when a business is being sold, particularly in circumstances such as liquidation (or merely financial difficulty) when it cannot be taken for granted that it will continue.