BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost Concept
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Business Entity Concept
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Going Concern Concept
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Materiality Concept
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Detailed explanation-1: -Answer-GAAP stands for General Accepted Accounting Principles. The proprietor of the business is treated as a creditor to the extent of his capital under which concept? Answer-The concept is a business entity concept.
Detailed explanation-2: -Hence, according to the Entity concept, the proprietor is treated as a creditor to the extent of his capital.
Detailed explanation-3: -According to the entity concept, the proprietor is treated as a creditor to the extent of his capital. An individual who owns a company or a sole proprietorship is known as a proprietor. The operations of the assets and their use by this person are authorized.
Detailed explanation-4: -BUSINESS ENTITY CONCEPT: According to this concept, every business is treated as a separate entity, separate and distinct from its owner. The owner of the business is the person who contributes capital in the business. The owner of the business is considered as the creditor of the business to the extent of his capital.
Detailed explanation-5: -The business entity concept states that the business is separate from the owner(s) of the business. Therefore the accounting records for even the simplest business, the sole trader, must be kept separate from the personal affairs of the owner or owners.