ENTITY THEORY Definition

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ENTITY THEORY is where a legal entity is regarded as having a separate existence from the owners. The financial statements are prepared from the perspective of the entity, not its owners. See PROPRIETARY THEORY.

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PRODUCTION is the creation of value or wealth by producing goods and services.

SELLING SHORT is selling securities not yet owned by the seller in anticipation of declining market prices. At some point in the future, the seller covers the sale by purchas­ing and delivering the securities.

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