This study examines how the theory and application of Business Entity and Objectivity Concepts influence the performance of a firm. It highlights on how these fundamental concepts, under Accounting Concepts, influence the activities and the performance of an organisation. To achieve the objective of this study, comprehensive literature and industrial observations are used. The study finds direct relationship between proper application of business entity and objectivity concepts and the performance of an organisation. It concludes that proper business activities must ignore favouring family and friends (business entity concept) and must be supported with relevant source documents (objectivity concept). Further observation reveals that most family and small-scale businesses (especially owner-managers) do not strictly comply with the two concepts and this normally retards their business operations at the long run. Therefore policy and decision makers, especially owners and managers, of such businesses must strictly apply business entity and objectivity concepts if they want to grow and sustain their businesses at the long run. This paper adds to the existing body of knowledge and serves as a precursor for a future research.
