Entity definition
/What is an Entity?
An entity is something that maintains a separate and distinct existence. In business, an entity is an organizational structure that has its own goals, processes, and records. Examples of entities are sole proprietorships, partnerships, and corporations.
Characteristics of an Entity
These entities all have names that may differ from the names of their owners. The entities may independently own assets and incur obligations, though some entity structures (such as the sole proprietorship and some forms of partnership) may allow owners to also be liable for the obligations of their business entities. An entity may also be required to submit tax returns and pay governments for their income earned.
Accounting for an Entity
In accounting, transactions are recorded and financial statements are produced for a specific entity. There is not supposed to be any intermingling between the affairs of investors and the business conducted by an entity that they own. If a parent entity owns another entity, then the parent may release consolidated financial statements for the combined entity.