Going concern

Definition

A going concern, in accounting and business terms, refers to a company’s ability to continue its operations and meet its financial obligations in the foreseeable future.

What is a going concern?

When a company is considered a “going concern,” it is assumed that it will continue its business activities without the intention of liquidation or significant disruption.

Key points related to a going concern include:

1. Operational continuity: A going concern assumption assumes that the company will continue its normal operations, generate revenue, and meet its financial commitments, such as paying its debts, employees, and suppliers.

2. Financial statements: In financial reporting, the assumption of a going concern is fundamental. When preparing financial statements, companies typically assume that they will remain a going concern unless there is evidence to the contrary.

3. Assessment and disclosure: Company management and auditors are responsible for assessing the company’s ability to continue as a going concern. If there are doubts about the company’s ability to continue, these doubts must be disclosed in the financial statements along with the potential implications.

4. Disclosure impact: If there are significant doubts about a company’s ability to continue as a going concern, it can have an impact on financial statements and decision-making. For example, it might affect how assets and liabilities are valued and disclosed.

The going concern assumption is essential for accurate financial reporting. It helps users of financial statements, such as investors, creditors, and other stakeholders, understand the company’s financial health and make informed decisions. If there are substantial concerns about a company’s ability to continue as a going concern, it can signal potential financial distress and impact the company’s access to credit and capital markets.

In summary, a going concern refers to the expectation that a company will continue its operations and meet its financial obligations in the foreseeable future. This assumption is crucial for accurate financial reporting and assessing the company’s financial health.

Example of a going concern

XYZ Manufacturing Company is a well-established manufacturer of electronic components. In its recent financial statements, the management includes a statement affirming the company’s status as a going concern. This is based on several factors:

Positive operating results: XYZ has consistently generated profits over the past several years, indicating a healthy financial performance.
Positive cash flows:The company has positive cash flows from its operating activities, ensuring it can meet its day-to-day operational expenses.
Long-term contracts: XYZ has secured long-term contracts with key clients, providing a stable source of revenue for the foreseeable future.
No indications of financial distress: There are no signs of financial distress, such as defaults on loans or significant liquidity issues.
Sound management and strategy:The management team has demonstrated effective strategic planning and operational management, contributing to the company’s overall success.

By affirming the going concern assumption, XYZ Manufacturing Company assures stakeholders that it expects to continue its operations for the foreseeable future without the need to liquidate or scale down significantly.

Ready to grow your business?

The Q1 Funding Playbook: Start 2026 with more cash and control

How can your business use AI to future-proof you in 2026?

Small business grants in Indiana

Future-focused accounting: Funding as a service

Why funding needs to be part of your advisory conversations

+1 (202) 804-9308

Business funding

About

Compare & save

Other

Disclaimer: Swoop Funding LLC (“Swoop”) is a financial technology platform and commercial finance broker, not a lender. Swoop does not provide loans or make credit decisions. We match US-based firms with third-party lenders, equity funds, and grant agencies. All financing is subject to lender credit approval and the specific terms and conditions of the funding provider.

Broker Compensation Disclosure: Swoop provides its platform and matching services to applicants at no direct cost. We receive compensation in the form of a commission or referral fee from the finance providers in our network upon successful placement. This compensation may vary by provider and product. In certain instances, the commission paid to Swoop may influence the interest rate or terms offered by the lender, which can affect the total amount payable under your agreement.

Credit Authorization & FCRA Notice: By submitting an application or registering an account, you provide “written instructions” to Swoop under the Fair Credit Reporting Act (FCRA) to obtain your personal and/or business credit profile from consumer reporting agencies. This information is used solely to evaluate your eligibility for financing and to match you with appropriate lenders in our network.

State-Specific Disclosures:

Florida & Utah: Swoop complies with state commercial financing disclosure laws regarding the transparency of terms for non-real estate secured commercial transactions.

Entity Information: Swoop Funding LLC is a Delaware limited liability company. US Headquarters: 43 W 23rd St, New York, NY 10010, United States. Contact: hello@swoopfunding.com

General Terms: Applicants must be 18 years of age or older. All firms must be registered and operating within the United States. SBA loans are issued by private lenders and guaranteed by the U.S. Small Business Administration; Swoop is not a government agency. Please review our Terms of Use and Privacy Policy for full details.

If you have a complaint, please refer to our Complaints Policy.

© Swoop 2026