goods withdraw by the proprietor of his personal use has not been recorded in the books of account. which accounting concept has been violated ? explain briefly..
Answers
Explanation:
Goods withdrawn by their for his personal use has not been recorded in the books of accounts. Which accounting concept has been violated? Answer- The business entity concept will be violated.
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ANSWER :
Goods withdraw by the proprietor of his personal use has not been recorded in the books of account. The accounting concept of Business Entity or Accounting Entity has been violated.
- According to the Business Entity or Accounting Entity concept, the owner of a business is always considered as distinct and separate from the business he owns.
- Every business transactions is analysed from the point of view of the business and not from the point of view of the persons who own them. This is known as Business Entity or Accounting Entity concept.
As the business transactions are separate from the household purpose of the proprietor, he must maintain separate accounts.
When the proprietor withdraws goods from the business for his personal use, he has to record it in the books of accounts of the business as he is liable to pay for this. If the proprietor doesn't record the transaction in the books of accounts, it will violate the Business Entity or Accounting Entity concept.
- Proprietor of the business is the person or people who invests his money as well as assets to commence the business with a motive to earn profit. So, he is the all in all of the business firm and his objective is to earn profit from the business. Hence, he must keep accounts of the business 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 business, accounts of the business must be kept distinctly without mixing the household or other personal transactions to it.