Question

according to which concept,even the owner of the business who had provided capital is treated as creditor of the business
1.bussiness entity concept
2.cost concept
3.two sides of account
4.concept of full disclosure
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Answer 1

Answer:

Business entity concept

Answer 2

ANSWER :

★ [1] Business Entity Concept

• ❒ According to Business Entity Concept, even the owner of the business who had provided capital is treated as creditor of the business.

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EXPLANATION :

• ❍ Business Entity Concept is also known as Accounting Entity Concept. According to this concept, the owner of a business is always considered as distinct and separate from the business he owns. Accounting Entity or Business Entity Concept defines the range and boundaries of the accountant's activity, the type of transaction that are to be recorded in the books of accounts of a business entity.

• ❍ As per Business Entity concept, business unit should have a complete separate set of books of accounts and the business transactions are recorded from the point of view of the firm, not from the point of view of the proprietor. The proprietor must keep accounts of the business from separately, to enable himself to ascertain profit. He must not mix the transactions of household affairs to that of business affairs. To calculate the profit of the busines, accounts of the business must be kept distinctly without mixing the household transactions or other personal transactions. Every transaction is analyzed from the point of view of the business and not from the point of view of the person who own them, i.e, owner of the business. This is known as Business Entity Concept.