All of the following are true statements about the entity assumption EXCEPT for:
A)a sharp boundary is drawn around each entity.
B)the transactions of the business cannot be combined with the transactions of the owner.
C)business operations cannot be divided into segments.
D)the entity is any organization that stands apart as a separate economic unit.

Question

Quizplus · Accepted Answer

The entity assumption allows businesses to be considered separate economic units. However, there is no requirement that a business cannot be divided into segments. In fact, many businesses have divisions or departments that operate somewhat independently. Option A is not necessarily true for all entities, as some entities may have fuzzy or overlapping boundaries. Option B is true - the transactions of the business must be kept separate from the personal transactions of the owner. Option D is also true, as the entity assumption holds that a business is a distinct economic unit that can own assets, incur liabilities, enter into contracts, and conduct transactions.

All of the Following Are True Statements About the Entity