Lecture 1 - Accounting Entity Concept

Question 1

what is the accounting enity concept

Answer 1

treats business seperatley from it;s owners they are 2 diff entities

Question 2

in the accounting entity concept what must be distinguished

Answer 2

private and business transactions

Question 3

explain the accrual concept using the apple example

Answer 3

if I’ve got one share of a limited company and go to apple and demad an IPAD cause I’m an owner it won’t be given

this is because ipad is an asset of apple (as it’s stock) - you can’t say just cause you’re the owner of apple the assets of apple are also your assets .

the same way apple can’t say we’re bankrupt so we’ve got to sell your house.

Question 4

any transaction ,asset , liability of a company remains

Answer 4

within the boundary of your company

the owners give money and stay out of the picture

Question 5

managers run the company not the sh why

Answer 5

just cause you own a share doesn’t entitle you to manage the company

Question 6

does the accounting entity concept hold for sole traders

Answer 6

yes

Question 7

how does ghet accouting entity concept work for shareholders

Answer 7

only record transactions about business , no personal things should be considered in the business account

Question 8

in terms of soletraders if an owner buys a car for his own use why can’t it be recorded as an asset in the business balance sheet

Answer 8

its not a business asset

Question 9

anything recorded as an asset in the balance sheet should be

Answer 9

an asset of the business