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  • Business Entity Concept

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    Scott Jefferson
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    Business entities and owners are separate parties, with transactions only relating to the organization, not private owner affairs. When owners withdraw capital from the business for personal use, this is recorded as a drawing that increases the drawing account and decreases a related business account like purchases or cash. Examples provided demonstrate recording a drawing for goods, cash withdrawal, and a personal expense without transaction.

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    Business entity concept

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    Business entities and owners are separate parties, with transactions only relating to the organization, not private owner affairs. When owners withdraw capital from the business for personal use, this is recorded as a drawing that increases the drawing account and decreases a related business account like purchases or cash. Examples provided demonstrate recording a drawing for goods, cash withdrawal, and a personal expense without transaction.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    107 views2 pages

    Business Entity Concept

    Uploaded by

    Scott Jefferson
    Business entities and owners are separate parties, with transactions only relating to the organization, not private owner affairs. When owners withdraw capital from the business for personal use, this is recorded as a drawing that increases the drawing account and decreases a related business account like purchases or cash. Examples provided demonstrate recording a drawing for goods, cash withdrawal, and a personal expense without transaction.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Business entity Concept

    Business and owners are two separate identifiable parties


    Transactions can only relate to the organisation and the owners
    Capital. ‘Investment balance’

    Owners private affairs are not recorded in businesses records.

    Drawings: When an owner withdraws funds (Capital) from the


    business ‘this is always recorded.’
    Examples

    Owner withdraws goods costing £600 for personal use


    Dr Drawings £600 (Drawings go up!)
    Cr Purchases £600 (Purchases go down!)

    Owner withdraws £2,000 from the businesses bank account


    Dr Drawings £2,000
    Cr Bank £2,000

    Owner pays for holiday from personal funds


    (NO TRANSACTION)

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