Asked by Marina Carosella on Jul 19, 2024
Verified
Marsha Bogswell is the sole stockholder of Bogswell Legal Services.Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services?
A) Monetary unit assumption.
B) Going-concern assumption.
C) Measurement (Cost) principle.
D) Business entity assumption.
E) Expense recognition (Matching) principle.
Business Entity Assumption
An accounting principle that treats a business as a separate legal entity from its owners, requiring separate accounting records.
Personal Financial Information
Data related to an individual's finances, including income, debt, investments, and credit history.
Sole Stockholder
An individual or entity that is the only owner of all the shares of a company.
- Determine the distinct business entities and their impact on accounting practices.
Verified Answer
AN
Alejandro NodarseJul 25, 2024
Final Answer :
D
Explanation :
The Business entity assumption requires that the financial information of the owner(s) should be kept separate from that of the business entity. Since Marsha is the sole stockholder of Bogswell Legal Services, this principle requires that her personal financial information should be kept separate from the financial information of the company.
Learning Objectives
- Determine the distinct business entities and their impact on accounting practices.
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