BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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of a sole proprietorship cannot be distinguished from the personal economic events of its owners.
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must be reported to the Securities and Exchange Commission.
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of an entity be kept separate from the activities of its owner.
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of different entities can be combined if all the entities are corporations.
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Detailed explanation-1: -What is the Economic Entity Principle? The economic entity principle states that the recorded activities of a business entity should be kept separate from the recorded activities of its owner(s) and any other business entities.
Detailed explanation-2: -The business entity assumption is an accounting principle that makes a legal distinction between the transactions carried out by a business and the transactions of the owner. It might also sometimes refer to the separation of different divisions in a company.
Detailed explanation-3: -The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities.
Detailed explanation-4: -Separate business entity refers to the accounting concept that all business-related entities should be accounted for separately. This idea may also be known as the economic entity assumption, and it posits that all businesses, other related businesses, and business owners should be accounted for separately.
Detailed explanation-5: -A corporation, sometimes called a C corp, is a legal entity that’s separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable. Corporations offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures.