Accounting Entity Concept

Question 1

What is the accounting entity concept?

Answer 1

Artificial construct that defines the boundaries of an organisational unit which is the object of focus of the particular accounting process.

Question 2

What is the equation used?

Answer 2

Capital = Assets - Liabilities.

Question 3

What balance do assets have?

Answer 3

Debit.

Question 4

What balance do liabilities have?

Answer 4

Credit.

Question 5

Effects of value going up and down:

Answer 5

• If an asset goes down in value it becomes credit.

- If an asset goes up in value it becomes debit.