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Entity principle

One of the first things that we teach students in an accounting class is that the business is separate from its owners. This is true, we say, even if it is a Mom & Pop store. Joe Smith starts up Smith Inc and puts $10,000 into it. We record this as equity and show it as the company Smith Inc “owing” this money to Mr. Smith the person. Joe injects a further $5,000 into the business as a temporary matter. We show him lending this money to Smith Inc and the company owing the money to him. This despite the fact that Mr. Smith is the sole owner of Smith Inc. So, it comes as somewhat of a surprise to this old accounting professor to hear the Supreme Court even accepting a brief from a company that claims to have religious principles. Sure the owners do. But, in my mind, and the minds of generations of accounting professors and their students Hobby Lobby is an entity separate from its owners. It is not at all clear to me in this Holy Week that Jesus died to save Hobby Lobby.

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