What does the concept of 'going concern' assume about a company?

The concept of 'going concern' assumes that a company will continue to operate for the foreseeable future without the intention or necessity of liquidation or significant curtailment of its operations. This assumption is fundamental in accounting and financial reporting, as it allows businesses to prepare financial statements on the basis that they can realize their assets and settle their liabilities in the normal course of business.

This perspective is critical for various stakeholders, including investors, creditors, and management, as it provides confidence that the company is stable enough to meet its obligations and sustain its operations over time. If a company were not considered a going concern, it would have to prepare its financial statements differently, focusing on liquidation values rather than ongoing profitability.

The other options present scenarios that contradict the going concern principle. Selling a company in the near future, not seeking additional financing, or being liquidated imply a cessation or severe limitation of operations, which does not align with the fundamental idea that a business is expected to function normally in the foreseeable future.