Question
The owner of the business is treated as a creditor of
the business according to which of the following concept?Solution
The owner of the business is treated as a creditor of the business according to the separate entity concept. This concept assumes that the business is a separate legal entity from its owners, and therefore, the owners are treated as creditors of the business. As such, the assets and liabilities of the business are not considered to be the personal assets and liabilities of the owners.
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