Business Entity Concept
NANYANG POLYTECHNIC SCHOOL OF BUSINESS MANAGEMENT
BM 0003 PRINCIPLES OF ACCOUNTING
2013/14 Semester 1 In-Course Assessment (ICA) 1 - Show & Tell Project TOPIC: Business Entity Concept
GROUP PROJECT REPORT Module Group: BM 0003 - AC (AF 1303) Student’s Name Student’s Admission Number KOH WEI YANG 133409 T COLLIN CHIA BOON SIANG 135999 K LEE CHEUK WAI NELSON 132007 H LEE WEI HAO 132618 K GOH WEI TING, CHARLENE 132558 T
TABLE OF CONTENTS
No. Content 1 2 3 Definition and Explanation of Business Entity Concept
Page
3 Concept Application in Business Transactions Effects and Consequences of Not Complying with the Concept 3-4
OTHERS
No. Content 1 2 3 Acknowledgments Appendices and Group Responsibility Assignment Sheet
Page 5
Attached Group Project Declaration Form
BM 0003/2013 S1
ICA 1 - Show & Tell Project Report
Page 2 of 5
1 Definition and Explanation of Business Entity Concept The Business Entity Concept is an accounting concept which states that the business and the owner of the business personally are regarded as two separate entities (or identifiable parties). Under this concept, all business transactions (recorded in the accounts of the business) cannot be mixed up with the personal transactions made by the owners or shareholders of the business. 2 Concept Application in Business Transactions (A) Chris Chee, owner of a business, withdrew $2,000 for his personal trip to Las Vegas.
In this case, Chris is withdrawing $2,000 for his personal expenses. Applying the Business Entity Concept, Chris’s personal expense cannot be recorded as the business expense as it was not used by the business. Therefore, the ‘Drawings’ Account have to be increased (debited) by $2,000 and the business’s ‘Cash’ Account to be decreased (credited) by $2,000. (B) A Certified Public Accountant (CPA) rents three rooms in a house, totaling at $3,000 per month. He sets aside a room for business uses only.
Assuming that the rental cost of all
BM 0003 PRINCIPLES OF ACCOUNTING
2013/14 Semester 1 In-Course Assessment (ICA) 1 - Show & Tell Project TOPIC: Business Entity Concept
GROUP PROJECT REPORT Module Group: BM 0003 - AC (AF 1303) Student’s Name Student’s Admission Number KOH WEI YANG 133409 T COLLIN CHIA BOON SIANG 135999 K LEE CHEUK WAI NELSON 132007 H LEE WEI HAO 132618 K GOH WEI TING, CHARLENE 132558 T
TABLE OF CONTENTS
No. Content 1 2 3 Definition and Explanation of Business Entity Concept
Page
3 Concept Application in Business Transactions Effects and Consequences of Not Complying with the Concept 3-4
OTHERS
No. Content 1 2 3 Acknowledgments Appendices and Group Responsibility Assignment Sheet
Page 5
Attached Group Project Declaration Form
BM 0003/2013 S1
ICA 1 - Show & Tell Project Report
Page 2 of 5
1 Definition and Explanation of Business Entity Concept The Business Entity Concept is an accounting concept which states that the business and the owner of the business personally are regarded as two separate entities (or identifiable parties). Under this concept, all business transactions (recorded in the accounts of the business) cannot be mixed up with the personal transactions made by the owners or shareholders of the business. 2 Concept Application in Business Transactions (A) Chris Chee, owner of a business, withdrew $2,000 for his personal trip to Las Vegas.
In this case, Chris is withdrawing $2,000 for his personal expenses. Applying the Business Entity Concept, Chris’s personal expense cannot be recorded as the business expense as it was not used by the business. Therefore, the ‘Drawings’ Account have to be increased (debited) by $2,000 and the business’s ‘Cash’ Account to be decreased (credited) by $2,000. (B) A Certified Public Accountant (CPA) rents three rooms in a house, totaling at $3,000 per month. He sets aside a room for business uses only.
Assuming that the rental cost of all
References: Definition and Explanation of Business Entity Concept http://accountingexplained.com/financial/principles/business-entity http://accounting-simplified.com/financial-accounting/accounting-concepts-andprinciples/business-entity-concept.html http://www.businessdictionary.com/definition/business-entity-concept.html http://www.business-case-analysis.com/trial-balance.html http://www.entrepreneur.com/encyclopedia/partnership Concept Application http://accountingexplained.com/financial/principles/business-entity Textbook: Accounting - An Asian Edition (2nd edition) by Fung, Tan, Suriya, Cheong, Fadhlina -- End of Report Acknowledgments -- BM 0003/2013 S1 ICA 1 - Show & Tell Project Report Page 5 of 5