Which of the following is not true where financial accounting adopts an entity assumption?
A) Transactions not directly impacting the entity are ignored.
B) Account externalities caused by the reporting entity are taken into account, some relating to the social and environmental implications of the entity's operations.
C) Sustainability and the 'entity assumption' are mutually exclusive.
D) The entity is treated as distinct from its owners and other stakeholders.

Question

Quizplus · Accepted Answer

Financial accounting only focuses on the financial impacts of an entity's transactions and does not take into account externalities caused by the reporting entity that relate to social and environmental implications. The adoption of the entity assumption means that the entity is treated as distinct from its owners and other stakeholders, and transactions not directly impacting the entity are ignored. Sustainability and the entity assumption are not mutually exclusive, as entities can still adopt sustainable practices while maintaining the entity assumption.

Which of the Following Is Not True Where Financial Accounting