What do you understand by the term "Accounting Entity" ?



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Explain and illustrate the term "Accounting Entity" with proper example.

4 Answer(s)


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A clearly defined economics unit that is accounted for separately. An accounting entity can be either a business or subdivision of a business that engages in economic activities, has economic assets and resources that must be accounted, and is separate from the personal dealings of its owners. Once an accounting entity is determined, transactions within the specific unit are accounted. The entity should not be flexible or regularly changed, in order to insure the accuracy of accounting.

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In simple Words

Accounting Entity means a Seperate Legal Entity

That is you have to maintain different accounts book for your business and for yourself if you are the business owner.

You cannot combine your personal expenditures with the business Accounts

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This is one of the concept on the basis of which accounts are prepared.According to this concept business is treated as a separate legal entity and distinct from its owners.

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Accounting Entity means a Seperate Legal Entity

That is you have to maintain different accounts book for your business and for yourself if you are the business owner.

You cannot combine your personal expenditures with the business Accounts

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