Definition: It is also called business entity assumption . A business entity is separate from owner . This is applicable to any types of business like companies, schools, hospitals, NGO's etc.
Business transactions are totally separate from the owner's personal transactions. This principle is also applicable to sole traderbusiness but it becomes more complex in this situation.
So, business records should be keptseparate and should not mix with sole trader owner's personal records.
Assets and Liabilities of a business entity are different from owner's personal asset and liabilities.
Business transactions are totally separate from the owner's personal transactions. This principle is also applicable to sole trader
So, business records should be kept
Assets and Liabilities of a business entity are different from owner's personal asset and liabilities.
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