Solution

The business entity concept in accounting is the principle that a business is considered to be separate and distinct from its owners or other businesses. This means that the business is treated as a legal entity in its own right, and its financial transactions and activities are recorded and reported separately from the personal transactions of its owners. The three fundamental accounting assumptions are: Consistency - This assumption requires that a business uses the same accounting methods and principles from one period to another. Going concern - This assumption assumes that the business will continue to operate for the foreseeable future. Accrual - This assumption requires that transactions and events are recognized in the financial statements when they occur, regardless of when the cash is received or paid.