Economic Entity Principle
Definition: the Economic Entity Principle is the fundamental basis in accounting to always separate the owner from the business from the business itself.
According to this principle, business transactions must be treated separately from personal owner transactions. In the accounting records of a business, only those transactions are recorded that have a particular business effect and transactions that are not relevant for a business must be treated separately. A business has a separate legal existence.
More on accounting and auditing: Accounting Cycle, Accounts Payable, Accounts Receivable, Accrued Revenue, Amortization, more on accounting and auditing...
You may also like:
Full-time MBA, Executive MBA, Executive Education, Online MBA.
MBA Brief offers concise, yet precise definitions of concepts, methods and models as taught in a study Master of Business Administration.
We like to keep things short, and provide links to learn more about your subject.
© 2024 MBA Brief - Last updated: 5-3-2024 - Privacy | Terms