According to this concept, it is assumed that for the purpose of accounting, the entity is treated as having separate existence and is different from that of itsowner. Personal transactions of owner which are not affecting business in any manner are not recorded in the books of accounts of business. If owner of the business brings cash amount in business entity then that amount willbe credited in his capital accounts. This capital is debt for business to the owner of business. If owner of the business withdraws any money for personal use then that amount will be debited to drawings account. When there is only sole owner (proprietor) of units, therefore it will be treated as an entity separate from that of owner for the purpose of accounting. This concept can also be extended to accounting separately for various divisions or branches of a firm or a company in order to results of each division separately. According to Accounting Entity Concept, owner and business are treated as two separate entities. However, law does not distinguish between a proprietary firms & its proprietor. Legally, since the liability of proprietorship firm or proprietory concern is unlimited, personal assets of proprietor can be attached for payment of business liabilities and business assets could be used for discharging personal liabilities. In partnership firm other then limited liability partnership, because unlimited liabilities of partners. Legally, a company has a states of an artificial person distinct from its owner or shareholders. Once shareholders pay full amount of capital subscribed by them,they are not liable to contribute any additional amount for company's liabilities.