Question

According to which concept, business is treated as a unit apart from owner _________________.

• A. Dual concept
• B. Divider concept
• C. Entity concept
• D. Landlord concept

Answer 1

The correct option is C Entity concept

For all accounting purposes, the business is considered to be a separate entity, distinct from its owner. The transactions of business are recorded in books of accounts of the business and the position of owner in his own books is like a creditor. If any amount is contributed by owner as capital, this will always be treated as liability.