Business is separate from the owner. (no matter the legal structure) Legal Entity In the eyes of the law sole traders and partners are regarded as the same as their owner. Companies are regarded as a separate legal entity to the owners/ shareholders. Sole trader

Business is separate from the owner. 
(no matter the legal structure)

Legal Entity

In the eyes of the law sole traders and partners are regarded as the same as their owner. 

Companies are regarded as a separate legal entity to the owners/ shareholders.

Sole trader

A unincorporated legal entity with one owner. 
No legal distinction between owner and the business.

Partnership

A unincorporated legal entity with more than one owner. 
No legal distinction between owners and the business.

Upgrade to remove ads

Only $1/month

Company

An incorporated entity which owners are considered separate from the business.

Going concern

Accountants assume the business has an unlimited life.

Limited Liability

Shareholders/ owners are only liable to the extent of their investment in the business.

Unlimited Liability

No limits of owners liability, liability extends to personal assets

Accounting Period

Accountants split the life into arbitrary time periods for recording and reporting.

Historical Cost

Value assets at price paid.

Relisation

Recognize revenue when it is earnt or goods are delivered.

Accrual Accounting

Measure profit according to when revenue is earnt or expenses are incurred. (not when cash changes hands)

Consistency

Apply consistent procedure/ methods so that information can be compared

Prudence

Care and caution in the valuation. Ie. understate assets and overstate liabilities.

Reliability

Present information free from error and bias

Relevance

 

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"