According to the _______concept, the proprietor is treated as a creditor to the extent of his capital

Concept of Business Entity

• The idea of a business entity presupposes that a company is a unique and independent entity from its owners.
• It signifies that the company and its owners must be handled separately for accounting purposes.
• In light of this, when a person injects capital into his business, it is recorded in the accounting records as a business liability to the owner.
• Here, it is presumed that one unique entity (owner) is disbursing funds to another distinct entity (business unit).
• Similar to this, any money the owner takes out of the company for personal use (drawings) is viewed as a reduction of the owner’s capital and, resulting in a reduction in the company’s liabilities.

As a result, the proprietor is considered a creditor to the amount of his capital under the Entity idea.

Money measurement concept:

• The money measurement idea, also known as the money measurement concept, emphasizes how every recorded event or transaction in accounting and economics generally is quantified in terms of money, the local currency’s monetary unit of measure.

Dual aspect concept:

• Each commercial transaction has a dual or a two-way influence, in accordance with the dual aspect concept.

Summary:

According to the _______concept, the proprietor is treated as a creditor to the extent of his capital. (A) Cost (B) Entity (C) Money measurement (D) Dual aspect

The proprietor is seen as a creditor to the extent of his capital under the entity idea. According to the cost idea of accounting, all purchases of goods (such as assets or commodities required for spending) should be recorded and kept in books at their original cost.