The business entity principle
A) requires that sole proprietors have unlimited liability
B) requires that partnership income be taxed at the partnership level
C) means that business records should be kept separate from the owner's personal records
D) requires that partnerships have written agreements
E) requires that corporations have shareholders

Question

Quizplus · Accepted Answer

The business entity principle requires that business records should be kept separate from the owner's personal records. This means that the financial transactions of the business should be recorded separately from the personal transactions of the owner or owners. This helps to ensure accuracy in accounting, helps to protect the personal assets of the owner, and makes it easier to calculate profits and pay taxes.

The Business Entity Principle