accounting questions?

Question

1.Explain the meaning of entity concept.
2.Suggest ways in which the Net Worth of a business entity might change.
3What types of assets and liabilities would a fashion store be likely to have

Answer 1

1.The business entity concept provides that the accounting for a business or organization be kept separate from the personal affairs of its owner, or from any other business or organization. This means that the owner of a business should not place any personal assets on the business balance sheet. The balance sheet of the business must reflect the financial position of the business alone. Also, when transactions of the business are recorded, any personal expenditures of the owner are charged to the owner and are not allowed to affect the operating results of the business.
2. One method involves calculating net worth by subtracting
liabilities from assets. Fixed or tangible assets can include
everything from machinery and office equipment to inventory, receivables
(you may have to guarantee their collection) and prepaid expenses, such
as taxes and deposits. on the other side of the balance sheet are
liabilities, items that may reduce the selling price of your company.
They include payables such as salaries, bills and periodic expenses,
short-term bank notes and/or long-term loans, as well as federal, state
and local taxes.
3. Cash and cash equivalents, Short-term investments, Inventories, Land, Property, buildings and equipment

Answer 2

Entity is the business itself. Walmart for example is a business entity (Corp is viewed as a person)
Net worth will change with anything involving assets and liabilities. (Net worth is the difference between asset and liabilities)
In a fashion store
Type of assets: biggest would be inventory, receivables (amount of money people owe you) cash and leasehold equipment (including computers, store register, lease or building)
Liabilities include: Bills you owe, long term lease obligations, taxes yet to be paid, (basically any expense that you owe and have not yet paid)

Answer 3

Entity is the agency, establishment, or whichever that acquires personality although inanimate. Entity can sue if it is legally organized or be sued where legally organized or not. Net Worth of business entity might change is there changed in asset such as capital and productions, if busines is prospering.
Fashion store: Assets: models, store, employees, capitals; clothes and accessories on sale. Liabilities: poor quality; poor service; undelivered orders; poor handlings, description of clothes and accessories not satisfied.. etc.