Accounting Principles

The going concern concept or going concern assumption says that businesses should be assumed to operate indefinitely or at least long enough to achieve their objectives. Put simply, the going concern concept assumes that businesses will operate for a long time and not close or be sold

The business entity concept or economic entity assumption, states that all business entities should be accounted for separately i.e. businesses, related businesses, and the owners should be treated as separate accounts. Even though the tax law considers a sole proprietorship and the owner as a single entity, GAAP disagrees.