Question

The entity concept of accounting is applicable to _________.

• A. Sole proprietary concern
• B. Partnership firm
• C. Joint stock company
• D. All of the above

Answer 1

The correct option is D All of the above

According to Business Entity Concept, a business is treated as a separate legal entity, and is distinct from it's owners. When a proprietor introduces capital in his own business, the capital is considered as liability from business point of view. Similarly, when he withdraws any money for personal use, it is treated as reduction in the liability of business. This concept is applicable to all businesses i.e. sole proprietary concern, Partnership firm, Joint stock company etc.