Business Entity Concept GAAP
Here we discuss about Business Entity Concept that is one of the Accounting Concepts and it is included in the Generally Accepted Accounting Principles (GAAP). Under this concept, the business must be regarded as Separate Legal Entity and it is separated from its owners. All the Business Transactions are recorded from the point view of business and not from the point view of owners. All the perso nal transactions of the owners of the business must be separated from the business. For example, if a sole owner invest Rs. 300000 in the business, then this amount invested is a Capital Account recorded in the book of company's business bu t if the ow ner withdraws Rs. 10000 for his personal use, then it has not concerned with the business and it ( Drawings ) is deducted from the capital of the business. Personal transactions of the Sole Owner or Proprietor ...