Accounting Concepts

3 min. read

Accounting centers on the concept of the business as an entity. From an accounting point of view there are two crucial aspects of the entity concept also known as separate concepts.

  1. Don't mix resources and obligations of that entity with other entities. If you have a business entity (e.g., Doe Chiropractic Clinic) you should not mix funds or transactions with your personal entity (e.g., Jane Doe).‚Äč
  2. You should view all financial events from the entity’s point of view. If you firm buys office supplies “on account” (a partial payment or on credit), this purchase creates an obligation of the entity, and an “account payable” by the entity to another entity.

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