Going Concern Concept                         

In the absence of information to the contrary, a business entity is assumed to carry on its operations indefinitely. This concept assumes that the enterprise neither has the intention nor the necessity to liquidate or curtail materially the scale of operations of its business venture in the foreseeable future. Seemingly inconsequential, this concept is critical to many broad and specific accounting principles.

Going concern concept implies that the resources of the concern would continue to be used for the purposes they are meant to be used. For instance, a manufacturing concern like TISCO, requires the land, buildings, machinery, etc., primarily for carrying out the production and selling of iron and steel products. Going concern concept implies that these land, buildings, machinery, etc., would continue to be used for this purpose. In fact, it is because these assets are expected to be with the concern for a long period of time for production and selling of end products that these assets are termed as 'Fixed assets'.

This concept does not imply that the business shall run permanently. Generally, when a business is set-up, it begins with a hope of long life, to achieve the goal. This justifies the basis of measuring many assets of the business on Historical Cost[1] Basis. Where it is anticipated that the business is going to cease operations in future, the assets and liabilities of the enterprise will not be measured at historical cost but at their liquidation values