Asset is something valuable which a business owns or has the use of.
Examples of assets are; office building, factories, Lorries, plant and machinery, computer equipment, computer equipment, cash, goods held in store awaiting sale to customers.
A liability is something which owned to somebody else. Liabilities are accounting term for the debts of business.
Examples of assets; Bank loan or overdraft, amount owed to suppliers, taxation owed to government, amounts invested in a business by its shareholders or owners.
Entity concept means a business is a separate entity from its owner.
In accounting a business is treated as a separate entity from its owners. This applies whether or not the business is recognized in law as a separate entity,
- Business entity applies whether the business is carried on by a company a sole trader or a partnership.
- The law also recognizes a company as a legal entity.
- The case is different in law when a business is carried on not by a business.
- But in accounting we treated all business are separate entity from its owners.