The Business Entity Concept explained

We look at the Business Entity Concept. This is a simple but very important idea in accounting which states that the financial accounts should only reflect the activities of the business and not the personal activities of its owners. We thus treat a business as an entity which is separate from its owners

We still report flows of money between the owner and business:
- Cash withdrawn from the business by the owner
- Capital invested into the business by the owner
However, we do not report what the owner does with withdrawn funds (or any personal activity).

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[arthigaikwad]

Thank you so much for this wonderful explaintions and for notes