The business entity concept requires that the owner's personal assets be separated from business assets.

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The business entity concept, also known as separate entity concept or economic entity concept, is a fundamental principle in accounting which requires that the financial transactions of a business must be recorded separately from the personal transactions of the owner(s) or other businesses. This means that the business is considered a separate legal and financial entity from its owner(s), and therefore, the assets, liabilities, income, and expenses of the business are not to be mixed with those of its owner(s). This helps to ensure that the financial statements of the business provide a true and fair view of its financial performance and position, and also to protect the personal assets of the owner(s) from risks and liabilities associated with the business operations.

The Business Entity Concept Requires That the Owner's Personal Assets