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Question

Owners’ equity is shown as the liability in the balance sheet. This is based on the accounting concept:

A Accrual concept Correct Answer Incorrect Answer
B Business Entity Concept Correct Answer Incorrect Answer
C Going Concern Concept Correct Answer Incorrect Answer
D Dual Entry Concept Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Business entity concept is one of the accounting concepts that states that business and the owner are two separate entities and therefore, should be considered separate from each other. As per this concept, the financial transactions pertaining to the business entity should be recorded separately from the business owners transactions.

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