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Economic entity

An economic entity is an organization or individual that conducts economic activities and keeps separate financial records for those activities. This means that the business’s finances—such as income, expenses, assets, and liabilities—are distinguished from those of its owners or other entities. This separation helps ensure accurate financial reporting, accountability, and clarity in understanding the financial health of the entity. For example, a company, a non-profit organization, or a sole proprietor are all considered economic entities because they track and report their finances independently.