Mel Green is the proprietor (owner) of Green's, a retailer of athletic apparel. When recording the financial transactions of Green's, Mel does not record an entry for a car he purchased for personal use. Mel took out a personal loan to pay for the car. What accounting assumption guides Mel's behaviour in this situation?

Question

Quizplus · Accepted Answer

The reporting entity concept dictates that the business's financial records should be kept separate from the owner's personal financial activities. Mel's decision not to record the car purchase in the business's books aligns with this concept.

Mel Green Is the Proprietor (Owner) of Green's, a Retailer