what is entity??can anyone explain?
Answers
Answer:
An entity is an object that exists. It doesn't have to do anything; it just has to exist. In database administration, an entity can be a single thing, person, place, or object. Data can be stored about such entities.
Answer:
The economic entity assumption is an accounting principle that separates the transactions carried out by the business from its owner. It can also refer to the separation between various divisions in a company. Each unit maintains its own accounting records specific to the business operations.
Many external stakeholders use the records maintained by a business. Governments and investors use a company’s financial records to assess its performance. Hence, it is important that the transactions reflect the activities of the entity accurately.
According to the economic entity assumption, a person evaluating a company’s records assumes all the transactions pertaining to the business are being reviewed. A sole proprietor should keep their business transactions separate from their own personal transactions. The assumption is also applicable to businesses with different types of activities.
For example, if a company runs two business divisions – one is a hotel chain and the other is a restaurant chain – separate accounts need to be maintained for each division. The expenses of one line of business cannot be combined with the other. Maintaining separate records will help the company know the true value of each business line.
Hope you understood.
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