Write short notes on :(i) Business Entity Concept (ii) Going Concern

1.	Write short notes on :(i) Business Entity Concept (ii) Going Concern Concept
Answer» (i) The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. It requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner. Without this concept, the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of a single business. (ii) The going concern concept of accounting implies that the business entity will continue its operations in the future and will not discontinue its operations due to any reason. A company is a going concern if no evidence is available to believe that it will or will have to cease its operations in future.

Write short notes on :(i) Business Entity Concept (ii) Going Concern Concept

Answer»

(i) The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. It requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner. Without this concept, the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of a single business.

(ii) The going concern concept of accounting implies that the business entity will continue its operations in the future and will not discontinue its operations due to any reason. A company is a going concern if no evidence is available to believe that it will or will have to cease its operations in future.

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