Basic Accounting Concepts: Separate Entity and Money Measurement

Vocabulary flashcards covering the Separate/Economic Entity and Money Measurement/Monetary Unit concepts in accounting.

Separate/ Economic Entity

An accounting principle stating that the business is assumed to be distinct from its owner, meaning business purpose transactions are kept separate from personal purpose transactions and only business economic events are recorded in the book.

Owner personal property

An asset purchased by a business owner for their own personal use, which is not considered part of the business's property under the separate entity assumption.

Money Measurement/ Monetary Unit

An accounting principle stating that only transactions that can be measured in monetary terms will be recognized and appear in the financial statements.

Non-monetary business item

Any business transaction or item that cannot be converted in monetary terms, and therefore should not be recognized as an accounting transaction.