Accounting Entity [AICPA Adapted]

(1) Units created by or under law, such as corporations, partnerships, and, occasionally,
sole proprietorships, probably are the most common types of accounting entities.
(2) Product lines or other segments of an enterprise, such as a division, department, profit
center, branch, or cost center, can be treated as accounting entities. For example, financial
reporting by segment was supported by investors, the Securities and Exchange
Commission, financial executives, and members of the accounting profession.
(3) Most large corporations issue consolidated financial reports. These statements often
include the financial statements of a number of separate legal entities that are considered
to constitute a single economic entity for financial reporting purposes.
(4) Although the accounting entity often is defined in terms of a business enterprise that is
separate and distinct from other activities of the owner or owners, it also is possible for an
accounting entity to embrace all the activities of an owner or a group of owners. Examples
include financial statements for an individual (personal financial statements) and the
financial report of a person's estate.
(5) The entire economy of the United States also can be viewed as an accounting entity.
Consistent with this view, national income accounts are compiled by the U. S. Department
of Commerce and regularly reported.