Entity Theory

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Dictionary Says

Definition of 'Entity Theory'

The assumption that the economic activities of a business is distinct from those of its owners. The entity theory maintains that the activities of a business can be accounted for separately from the activities of its owners, therefore the owners are not personally responsible for loans or other liabilities taken on by the company. The entity theory is fundamental to modern accounting.
Investopedia Says

Investopedia explains 'Entity Theory'

From a business liability standpoint, limited liability for owners in certain business structures is very important for commerce. But in order to maintain a system whereby owners are not personally liable for the liabilities of a corporate entity, it must be possible to separate the business finances from those of the owners.
Search results for

'Entity Theory'

  • What Makes An M&A Deal Work?

    http://www.investopedia.com/articles/financial-theory/08/ma-deal.asp
    ... 20 2008 | Filed Under » Credit Cards, Economics, Entrepreneur, Financial Theory,
    Options. ... cash flow of the merged business beyond what each entity could have ...

  • Detecting Financial Statement Fraud

    http://www.investopedia.com/articles/financial-theory/11/detecting-financial-fraud.asp
    ... ACFE defines fraud as "deception or misrepresentation that an individual or entity
    makes knowing that the misrepresentation could result in some unauthorized ...

  • Biggest Merger and Acquisition Disasters

    http://www.investopedia.com/articles/financial-theory/08/merger-acquisition-disasters.asp
    ... November 03 2008 | Filed Under » Economics, Entrepreneur, Financial Theory, Forwards. ...
    creating cost savings and/or increased revenue for the new entity. ...

  • What Investors Can Learn From M&A Payment Methods

    http://www.investopedia.com/articles/financial-theory/11/MA-payment-reveals-alot.asp
    ... December 08 2011 | Filed Under » Business, Financial Theory. Investors can learn
    a lot ... In a merger, two companies combine to form a new entity; whereas during ...

  • FINRA: How It Protects Investors

    http://www.investopedia.com/articles/financial-theory/11/finra-history-overview.asp
    ... September 20 2011 | Filed Under » Financial Theory, Regulations. The stock market
    crash ... the New York Stock Exchange (NYSE) merged into a new singular entity. ...

  • How To Become A Corporate Board Member

    http://www.investopedia.com/articles/financial-theory/11/become-board-member.asp
    ... February 09 2011 | Filed Under » Business, Financial Theory. There has always been
    a ... provide general oversight on behalf of shareholders and any entity with a ...

  • Peer-To-Peer Lending Breaks Down Financial Borders

    http://www.investopedia.com/articles/financial-theory/08/peer-to-peer-lending.asp
    ... March 26 2009 | Filed Under » Financial Theory, Options. Peer-to-peer (P2P) lending,
    also ... means settled; questions remain on just what kind of an entity a P2P ...

  • Moral Hazards: A Bump In The Contract Road

    http://www.investopedia.com/articles/financial-theory/09/moral-hazard-conflict.asp
    ... March 09 2009 | Filed Under » Economics, Financial Theory, Insurance, Options. A
    moral ... but too much leverage can prove detrimental to an entity's stability. ...

  • A Primer On Private Equity

    http://www.investopedia.com/articles/financial-theory/11/private-equity-primer.asp
    ... July 06 2011 | Filed Under » Financial Theory, Investment. Private equity (PE) has
    gained a ... the acquirer will transition the firm to a private entity in order ...

  • Alternative Assets For Average Investors

    http://www.investopedia.com/articles/financial-theory/08/alternative-assets.asp
    ... We can, perhaps, start by explaining what an alternative asset is not: it is not
    a direct fixed-income or equity claim on the assets of an issuing entity. ...

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