An economic entity is one of the assumptions made in
generally accepted accounting principles
Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on t ...
. Almost any type of organization or unit in society can be an economic entity. Examples of economic entities in
accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activit ...
are hospitals, companies, municipalities, and federal agencies.
The "Economic entity assumption" states that the activities of the entity are to be kept separate from the activities of its owner and all other economic entities.
See also
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Piercing the corporate veil
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which i ...
References
Financial accounting
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