Separate Entity Assumption

Introduction to Accounting

MS: Andaian Entiti Berasingan · EN: Separate Entity Assumption · ZH: 独立实体假设

Meaning

The separate entity assumption treats the business as a unit separate from its owner for accounting purposes. Therefore only the business's transactions are recorded in the business books, not the owner's personal transactions. This assumption is important so the true performance of the business can be measured.

Example

Mr Aziz owns Laju Motor Workshop. When he takes RM200 of business money for personal use, it is recorded as drawings and not as a business expense.

Source: DSKP KSSM Prinsip Perakaunan Tingkatan 4

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