business (noun, busi-ness, \ ˈbɪznəs \) entity (noun, en-ti-ty, \ ˈentəti \) concept (noun, con-cept, \ ˈkɑːnsept \)
Definition: is a notion stating that the financial activities linked to a specific business have to be independently recorded from those of the corporate entity’s owner(s). To implement this concept, the said owner has to keep a disassociated accounting record for the business that doesn’t contain any assets or liabilities tied to the owner himself. Relieved of this concept, the financial records of several entities would blend, making it impossible to detect the financial activities of an individual organization.
In a Sentence:
- If you factor in the business entity concept, the money Mr. Welsh spent on adding an extra floor on top of our office building to build an apartment there isn’t a valid company expense.
- When the owner of TripadLog lent money to his own business, it was recorded as the firm’s liability due to the business entity concept.
- To adhere to the business entity concept, the company’s owner can’t pay its bills by using his personal bank card.
Synonyms and related words: separate entity, business entity, accounting concept, economic entity concept
