What is Seperate entity concept?

Question

Accepted Answer

The separate entity concept is a fundamental accounting principle that states a business's financial transactions should be kept separate from its owner's personal transactions.

Business and owner are considered separate entities
Owner's personal transactions should not be mixed with business transactions
Helps in maintaining accurate financial records and assessing the business's performance
Important for legal and tax purposes
Example: If the owner uses personal funds to purchase business supplies, it should be recorded as a loan to the business

Accepted Answer

The accounting entity concept (or entity concept or separate entity concept) is the principle that financial records are prepared for a distinct unit or entity regarded as separate from the individuals that own it.

What is Seperate entity concept?

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