state business entity concept
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Business entity concept :
This concept assumes that business has a distinct and separate entity from its owners. It is also separated from employees, creditors, officers etc, Who are associated with it. The Bussiness enterprise exists in its own rights. So, transactions must be recorded in the books with such persons together with the owners. As, Such accounts are maintained for Bussiness entity as distinguished from all categories of persons related to it.
when the owner introduces cash to the bussiness as capital it simply means an inflow of cash to the bussiness which is recorded in the books of Bussiness. But, to an owner, it is a shift from a personal cash to bussiness cash. Thus, this concept suggests the affairs of the bussiness must not be mixed up with the private affairs of owners or other persons associatiated with it.
This concept assumes that business has a distinct and separate entity from its owners. It is also separated from employees, creditors, officers etc, Who are associated with it. The Bussiness enterprise exists in its own rights. So, transactions must be recorded in the books with such persons together with the owners. As, Such accounts are maintained for Bussiness entity as distinguished from all categories of persons related to it.
when the owner introduces cash to the bussiness as capital it simply means an inflow of cash to the bussiness which is recorded in the books of Bussiness. But, to an owner, it is a shift from a personal cash to bussiness cash. Thus, this concept suggests the affairs of the bussiness must not be mixed up with the private affairs of owners or other persons associatiated with it.
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