Going concern concept is the accounting concept which implies to that the business will continue for long, it will never come to end. Therefore, business is regarded as going concern. In the ordinary course, accounting assumes that the business will continue to exist and carry on its operations for an indefinite period in the future.
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The entity is assumed to remain in operation sufficiently long to carry out its objects and plans. The values attached to the assets will be on the basis of its current worth. The assumption is that the fixed assets are not intended for re-sale. Therefore, it may be contended that a balance sheet which is prepared on the basic of record of facts on historical costs cannot show the true or real worth of the concern at a particular data. The underlying principle there is that the earning power and not the cost is the basis for valuing a continuing business. The business is to continue indefinitely and the financial and accounting policies are followed to maintain the continuity of the business unit.