going concern

Definition

The assumption that a company will continue operating for the foreseeable future rather than liquidating, which underpins how financial statements are prepared. When auditors question this assumption, update your résumé.

Example Usage

The auditor's report included going concern doubts, triggering a stock price collapse as investors realized bankruptcy was now on the table.

Origin

Auditing principle dating to early 20th century, codified in accounting standards

Fun Fact

The going concern assumption is why assets are valued at historical cost rather than liquidation value—accountants optimistically assume you'll stay in business.

Source: Auditing standards and accounting principles

Related Terms

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underwrite

To assume financial risk by guaranteeing payment or agreeing to buy unsold securities, essentially the business equivalent of being the backup friend who promises to buy all the unsold Girl Scout cookies. Investment banks underwrite stock offerings, insurance companies underwrite policies, and both pray they've done their math correctly. It's putting your money where someone else's mouth is.

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receivable

Money that someone owes you but hasn't paid yet, living in that optimistic space between "they said they'd pay" and "we're calling the lawyers." It's an asset on paper because theoretically you'll collect it, but in practice it's IOU notes from varying degrees of reliable sources. Also known as "accounts receivable" when accountants want to sound official.

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budget

A detailed financial fantasy document that outlines how you plan to spend money you may or may not have on things you may or may not need. In government, it's a political weapon disguised as a spreadsheet; in business, it's what you ignore until Q4 when panic sets in. The difference between your budget and reality is called 'variance,' which is accountant-speak for 'oops.'

💰 Finance / Accounting

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underwriting

The mystical process where financial institutions assess risk and decide whether to give you money, usually involving algorithms, credit scores, and prayers to the profit gods. Investment banks use it to evaluate securities before offering them to investors, while insurance companies use it to determine if you're worth the gamble. It's essentially professional betting on whether you'll pay your bills or file a claim.

💰 Finance / Accounting

Beginner

Net Worth

Everything you own minus everything you owe, a number that for most millennials can be expressed as a negative sign followed by their student loan balance. Forbes publishes a list of people with the highest net worth annually, presumably just to ruin everyone's day.

💰 Finance / Accounting

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working capital

Current assets minus current liabilities—the money available to fund daily operations without selling the furniture. Positive working capital means you can pay your bills; negative means start selling that furniture.

💰 Finance / Accounting

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