The going concern principle is the assumption that an entity will remain in business for the foreseeable future. This principle underlies all accounting and business transactions. Credit is extended on this principle. Provision of basic services depends on this principle. We go to bed hoping our jobs will be available in the morning because of this principle. We generally assume that things will continue as they are. And as long as we maintain this assumption we don’t usually take care of the scenario when it is no longer valid.
We should all strive to become going concerns for at least 12 months. This means we should put in place systems to ensure that we are able to meet our financial obligations for the next 12 months even without additional income. This is easier said than done. We can do this by converting a portion of our incomes into easily liquidated assets like stocks, bonds, etc. This require a lot of discipline and delayed gratification. But the rewards can be immense. Becoming a going concern gives one peace of mind and a sense of freedom. It also becomes much easier to ride crazy storms which often come our way.