The going concern concept of accounting implies that the business entity will continue its operations in the future and will not liquidate or be forced to discontinue operations for any reason. Another definition would say “…will continue in operation for the foreseeable future”. A company is a going concern if no evidence is available to believe that it will or will have to cease its operations in the foreseeable future.
For this reason, assets purchased are not charged to one full year, but their costs are carried from year to year, based on an estimated useful life and then depreciated annually. Secondly, the value of the business could be carried forward as the goodwill and amortized over an estimated useful life.
But enough of my accounting chants.
Let’s see how this concept could help you.
Human beings could have extrinsic or intrinsic values; things that they cherish and things that they spend their time on for the rest of their lives. You could also talk about their propensities, that is, their desires for earthly things, starting from physical enjoyment to emotional experiences. Also, the attitudes, images, and characteristics that they build for themselves, whether on social media or displayed in public life.
Which of them would you say would last for the foreseeable future?
As a lover of classical music, I come to realize that most of the compositions were done way back 300 or 400 years ago. Are you talking about Mozart, Beethoven, Handel, Bach, Chopin, and other great composers? Their music has lived on for many years.
You could also talk about writers like William Shakespeare (1564–1616) whose writings still influence society even after 400 years. At the outbreak of coronavirus, a name that pops up several times for his prediction is Nostradamus — the Frenchman who was born in 1503 and died in 1566, but his spiritual writings are still influencing society after 500 years.
Does that make any sense to you at all that your current behaviours, practices, and production are questionable? That nobody even comes back to find out after 2 years what you have done and what you have achieved?
Instead of showing off flashy cars and hastily built houses on social media and in showbiz, think about a legacy. Think about the “foreseeable future” in your dealings. Think about your TikTok and face paintings and see whether they would last for even the next 3 years.
I mean, you should create value that would last beyond one generation, at least. That requires looking at what benefits mankind. Check what the solutions to numerous human problems are. Offer a solution.
Then the knowledge of one of the accounting concepts — the going concern concept — shall make sense to you.
Let your life be a going concern and not one that is just short-lived.
