Business Entity Concept Video Lecture - SSC CGL Tier 2 - Study Material,

let us now understand some accounting
concepts what business entity concept
the entity concept says that the
business is a separate legal entity
separate from what separate from owner
polar is different business is different
this is the owner this is the let us say
this is his business the business has
its own books of account the business as
far as accounting is concerned would be
treated as a separate entity so when the
owner brings money to the business he
brings in money to the business we say
the business has a liability now to the
owner
suppose this owner brings in rupees 1
lakh now we see the business as a
liability liability of the business to
owner some day leash must return it if
the business is to be closed tomorrow
the business has to return to the owner
rupees 1 lakh so it is accounted for
separately
whenever the owner brings in money it is
called
capital so separate and it is called
capital so we create a separate account
called capital capital account is
nothing but the proprietors account
similarly if this business if the owner
were to be draw some money from the
business this is withdraws the money
from the business this means he has true
the polarock owes money to the business
the business can collect this money from
the owner and therefore an accounting
entry is passed to show that the owner
has withdrawn money from the business
the account as such is called drawings
account so the drawings account and
capital account are nothing but fallouts
of the entity concept both capital
and drawings accountant represent the
proprietors become the proprietor the
older is separate from the business
entity all transactions with the owner
have to be recorded in the books of
account the corner is a separate person
as if money has been given to him or
money has been taken from him so the
business has its own book of account and
the business is separate from the moment
that is what we have for those who are
little familiar in advance for those who
are familiar with accounts you have what
is called a capital account you have
what is called a drawings account both
are nothing but the proprietors account
because the business is separate from
the proprietor separate from the owner
the business maintains the owners are
come it keeps record if money is taken
by the owner
it keeps record if money or goods are
brought in by the business entity
concept