At 31 December 2023, Chukwuemeka's business had the following: total assets ₦850,000; capital ₦500,000; trade payables ₦120,000; bank overdraft ₦80,000. Which accounting concept is directly applied when capital is shown separately from liabilities in the balance sheet?

The business entity concept treats the business as separate from its owner, so capital contributed by the owner is regarded as a liability of the business to the owner and is shown separately from external liabilities. This separation ensures that the financial statements reflect only the business's own financial position. The dual aspect concept also applies, but the specific reason capital is separated from liabilities is the business entity concept.