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Class : 11
Unit : Account

What do you understand by ‘Business entity’ concept?

Ans : According to this concept, the business organization and the owner of the business are two different entities. So, business transactions are recorded in the books of account of business organization and not in the books of account of its owner. By this concept, a business has nothing to do with the personal transactions of its owners. For example, rent paid for the business is recorded in the books of business but rent paid by owner for his personal use is not recorded in business book.
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