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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STRIPPED PRICE, for a preferred stock, is the market price minus the theoretical dividend.

SPECIFIC IDENTIFICATON INVENTORY VALUATION is a method of valuing and tracking inventory where each item can be identified. Specific identification is most often used for large, easily traceable items, such as furniture or vehicles. If tracking each individual inventory item is not practical, the inventory can be valued using other accepted methods, such as the first-in, first-out method (FIFO) or the last-in, first-out method (LIFO).

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