Question

Answer in One Sentence :

What is entity concept?

Answer 1

According to the entity concept, a business is considered as a separate entity from its owners. It states that the transactions related to the proprietor of the business are to be treated separately from the business transactions. The personal property, income, expenses etc. of the proprietor should be kept separate from the business. The amount invested by the proprietor in the business i.e. capital is shown as a liability for the business.