Accounting Concepts The Entity concept

May 29th, 2015
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Murray State University
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Accounting concepts and conventions generally have no regulatory backing but accounting standards that are prepared by the regulating agencies use such concepts and conventions. Accounting concepts and conventions are evolved over a long period of time and are fundamental to accounting system.

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Accounting ConceptsAccounting concepts and conventions generally have no regulatory backing but accounting standards that are prepared by the regulating agencies use such concepts and conventions. Accounting concepts and conventions are evolved over a long period of time and are fundamental to accounting system. The following are few such important concepts and conventions which are used in preparing accounting statements.1. The Entity conceptThis concept emphasis that a business entity is separate and distinct from its owners. The accounts and financial statements should show the affairs of the business not that of the owner. In other words, even if there is any transaction between owners and the business unit or any transactions performed by the business unit on behalf of owners, it should be reflected in the account as if owner is different from business unit. For instance, if

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