The economic entity is the companyIn other words, it is about economic activity organized as a unit and with respect to which the ownership of resources is predicated.
Economic organization that is responsible for generating income through its activity and also consuming it, such is the case of the company, the state and families
In other words, the economic entity is the organization dedicated to generating income through the sale of a service or product.
Economic entities are any active participant at the behest of the market economy, and as such makes decisions that obviously end up influencing the corresponding economy.
The economic agents or entities that make up the market produce and consume resources at the same time, always trying to reduce costs as much as possible and maximize the benefits obtained.
The entity will always be subject to the law of supply and demand, where the higher the price the supply will increase and the demand will tend to decrease, and when prices fall, demand increases and supply falls.
Companies must be considered entities differentiated from their owners and their operations, therefore, they must be registered taking into account the effect they have on it and not on them.
But although the company is the economic entity par excellence, we must warn that there are two more, the state and the family.
The state has great relevance in the mobility of the economy since its interventions and decisions, especially those in which there is excessive state control, will obviously affect the behavior of the rest of the economic entities.
Among other actions, it can take on debt, sell it, lower or raise interest rates, it can increase public spending to allocate it to some infrastructure work, but this fact, if not done consciously, always results in an increase in the deficit and the arrival of inflation, a complex scenario for any society, given that the purchasing power of society declines ...
Historically, it has been discussed what the role of the state should be, many argue that its regulation should be strong and others that it should be kept to a minimum and let the market regulate itself
And the family is also considered as an economic entity because of the consumption that it carries out of goods and services constantly with the mission of satisfying its basic needs such as food, health, education, or, failing that, others that have to do with its desires for non-basic consumption and that have the intention of improving their well-being and domestic life, such is the case of the purchase of an armchair, a dishwasher, among others.
Therefore, the economic entity is interpreted as an economic-social unit because it is made up of human, technical, and material elements, which have the mission of obtaining profits from the participation they hold in the market in question.
Throughout the world, economic activity is carried out by identifiable entities that constitute combinations of human resources, natural resources, and capital, which will be coordinated by a decision-making authority, which will always be aimed at achieving the objectives. purposes of the entity.
It should be noted that accounting is concerned with identifying that entity that has particular economic purposes and that is independent from other entities
Meanwhile, to identify an entity, two different criteria are used, on the one hand, a set of criteria aimed at satisfying some social need with its own structure and operation.
And another part a set of independent decisions in relation to the achievement of specific ends, which is the same as the satisfaction of a social need.
From the foregoing it is clear that the personality of a business is independent from that of its shareholders or owners and therefore its financial statements should only include the assets, securities, obligations and rights of the independent economic entity.
The entity may be a natural person, a legal person, or, failing that, a combination of several of them.
