Question

Discuss Business Entity concept.

Answer 1

This accounting concept separates the business from its owner. As far as accounting is concerned the owner and the business are two separate entities. This will help the accountant identify the business transactions from the personal ones. All forms of business organizations must follow this assumption.
So for example, if the owner brings in an amount of capital into the business, we will treat this as a liability of the business as the owner and business are two different entities.