Entity concept

In account ing, a business or an organizat ion and it s owners are t reat ed as t wo separat ely
ident ifiable part ies. This is called t he entity concept. The business st ands apart from ot her
organizat ions as a separat e economic unit . It is necessary t o record t he business's t ransact ions
separat ely, t o dist inguish t hem from t he owners' personal t ransact ions. This helps t o give a
correct det erminat ion of t he t rue financial condit ion of t he business. This concept can be
ext ended t o account ing separat ely for t he various divisions of a business in order t o ascert ain
t he financial result s for each division. Under t he business ent it y concept , a business holds
separat e ent it y and dist inct from it s owners. "The ent it y view holds t he business 'ent erprise t o
be an inst it ut ion in it s own right separat e and dist inct from t he part ies who furnish t he funds"[1]

An example is a sole t rader or propriet orship. The sole t rader t akes money from t he business by
way of 'drawings', money for t heir own personal use. Despit e it being t he sole t rader's business
and t echnically t heir money, t here are st ill t wo aspect s t o t he t ransact ion: t he business is 'giving'
money and t he individual is 'receiving' money. Even t hough t here is no ot her legal dist inct ion
bet ween t he sole t rader and t he business, and t he sole t rader is liable for all of t he debt s of t he
business, business t ransact ions may be t axed separat ely from personal t ransact ions, and t he
propriet or of t he business may also find it useful t o see t he financial result s of t he business. For
t hese reasons, t he affairs of t he individuals behind a business are kept separat e from t he affairs
of t he business it self.

In Anthropology

The t erm has been coined by Brit ish ant hropologist Mark Lindley-Highfield of Ballumbie Cast le t o
describe ideas, such as ‘t he West ’, which are given agent ive st at us as t hough t hey are
homogeneous real t hings, where t his ent it y-concept can have different symbolic values
at t ribut ed t o it t o t hose of t he individuals making up t he group, who on an individual basis can be
perceived different ly. Lindley-Highfield explains it t hus: ‘t he discourse flows at t wo levels: One at
which ideological disembodied concept s are seen t o compet e and cont est , t hat have an agency
of t heir own and can have agency act ed out against t hem; and anot her at which people are
individuals and may be dist inct from t he concept s held about t heir broader societ y.’[2]

References

1. "The Entity Concept in Accounting" by Professor George R. Husband, Wayne State University (https://w
ww.jstor.org/pss/241783)

2. Lindley-Highfield of Ballumbie Castle, M. (2015) The Politics of Religious Conversion: an exploration of

conversion to Islam and Anglican Christianity in Mexico, Dundee: Academic Publishing, p.102 (https://p
ureadmin.uhi.ac.uk/ws/portalfiles/portal/2435790/17536882.pdf)

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