The going concern principle. The main idea: to be, or not to be? Is this company alive and well? Is its heart beating at a steady pace? Or more formally: going concern means a business is financially stable and can operate with the expectation of indefinite existence… or at least for the foreseeable future. The opposite of going concern would be bankruptcy or foreclosure.

Here’s an example of testing for the going concern principle. What if:
a major customer has gone bankrupt,
it’s questionable whether outstanding accounts receivable will be paid,
and it’s unlikely that another customer of this size will be found.
Can we assume the business operates as “going concern”, and prepare the financial statements accordingly? That’s a question that is not easy to answer. The company should probably disclose that there is substantial doubt about the entity's ability to continue as a going concern.

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