Accounting Dictionary

Economic Entity Assumption

The Company is a separate business. Its activities are separate and distinct and not co-mingled with any other entity.

If B Company and C Company recorded all their transactions in one set of books the economic entity would be B& C Company. If B Company had a separate bank account and a separate set of records and C Company had a separate bank account and a separate set of records, then we would have two economic entities; B Company and C Company.

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