Going concern
Going concern assumes an entity will continue operating for the foreseeable future rather than liquidating or ceasing trading. Management considers available information, including at least twelve months from the reporting date. Serious uncertainty requires appropriate disclosure. If liquidation or cessation is intended or there is no realistic alternative, the going concern basis is inappropriate and another basis must be explained.
Worked example
A business with temporary losses may remain a going concern if credible financing and cash forecasts support continued operation.
Common mistake
A loss or bank overdraft does not automatically prove failure; equally, the assumption cannot be retained merely to avoid recognising difficulties.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |