Concept:The business entity concept states that a business and its owner are treated as separate units for accounting purposes.
Explanation:Business transactions are recorded from the point of view of the business only.
The owner’s private income, expenses, assets, and liabilities are not mixed with business records.
For example, if the owner uses business money for personal needs, it is treated as drawings.
Drawings reduce the owner’s capital but are not recorded as a business expense.
This separation ensures that the true financial position of the business is clearly known.
The realization concept deals with when revenue is recognized.
The cost concept states that assets are recorded at their purchase price.
The dual aspect concept is the basis of double-entry bookkeeping.
Only the business entity concept matches the given statement.
Answer:B. Business entity concept.