Asked by Ashley Hewett on May 12, 2024
Verified
Which of the following concepts relates to separating the reporting of business and personal economic transactions?
A) cost concept
B) unit of measure concept
C) business entity concept
D) objectivity concept
Business Entity Concept
An accounting principle that treats a business as separate from its owners, requiring separate recording of business transactions.
Cost Concept
An accounting principle that states assets and services should be recorded and based on their original cost at the time of acquisition.
Unit of Measure Concept
An accounting principle that states transactions should be recorded in a single, consistent currency unit for accuracy and comparability.
- Acquire knowledge of the business entity concept and its effects on accounting strategies.
- Comprehend the fundamental accounting concepts including the business entity concept and the cost concept.
Verified Answer
SF
Stephy FurretMay 16, 2024
Final Answer :
C
Explanation :
The business entity concept states that a business should be considered a separate entity from its owner(s) and that its financial transactions should be recorded separately. This means that personal economic transactions of the owner(s) should not be mixed with business transactions in the financial records. Therefore, separating the reporting of business and personal economic transactions is related to the business entity concept.
Learning Objectives
- Acquire knowledge of the business entity concept and its effects on accounting strategies.
- Comprehend the fundamental accounting concepts including the business entity concept and the cost concept.