An accounting entity is a business or organization that is treated as separate from its owner or other businesses for accounting purposes.

Under this concept:

The business has its own financial records

Owner’s personal transactions are not mixed with business transactions

Profit or loss is calculated only for that specific entity

For example:
In a sole proprietorship, even though the owner and business are legally the same, they are treated as separate accounting entities.

In simple terms, an accounting entity is a business unit whose financial transactions are recorded separately from others.