Definition of economic entity

The economic entity is the business, that is, it is about the 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 request of the market economy, and that as such makes decisions that obviously end up influencing the economy corresponding.

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 supply price will increase and demand will tend to decrease, and when prices fall, demand and supply increases falls off.

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 in those in which there is excessive control of the state will obviously affect the behavior of the rest of the entities economic.

Among other actions you can take debt, sell it, lower or raise interest rates, you can increase public spending to allocate it to some work of infrastructure, but this fact, if not done in a conscious way, always results in an increase in the deficit and arrival of inflation, a complex scenario for any society, given that the purchasing power of the society decays ...

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 due to the consumption that it carries out of goods and services constantly with the mission of satisfying its basic needs, such as feeding, Health, education, or failing that, others that have to do with their non-basic consumer desires and that have the intention of improve your well-being and domestic life, such is the case of buying an armchair, a dishwasher, among others.

Therefore, the economic entity is interpreted as an economic-social unit because it is integrated by human, technical, and material elements, which have the mission of obtaining profits from the participation that 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 an authority that makes decisions, which will always be aimed at achieving the 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 structure and operation own.

And another part a set of independent decisions in relation to the achievement of specific ends, which is the same as saying the satisfaction of a social need.

It is clear from the foregoing that the personality of a business is independent of that of its shareholders or owners and therefore in their states Only the assets, securities, obligations and rights of the economic entity should be included. Independent.

The entity may be a natural person, a legal person, or, failing that, a combination of several of them.

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