Accounting Entity

What Does Accounting Entity Mean?
A clearly defined economics unit that is accounted for separately. An accounting entity can be either a business or subdivision of a business that engages in economic activities, has economic assets and resources that must be accounted, and is separate from the personal dealings of its owners. Once an accounting entity is determined, transactions within the specific unit are accounted. The entity should not be flexible or regularly changed, in order to insure the accuracy of accounting.

Also known as a “reporting entity”.

Investopedia explains Accounting Entity
Accounting entities are separated so that they can be focused in on by an accountant. This enables the accountant to record and report transactions that are specific to that entity. Once an entity is established, accountants are able to determine the cash flows and transactions that will impact the entity’s financial statements.

Related Terms

Accountant
Accounting
Asset
Cash Flow
Economics
Income Statement
Transaction
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