Emily Hogan recently opened a new business. The business has been very successful and as a reward for all her hard work Emily spent a day at the local spa. Emily paid for the spa using a company credit card and charged the amount to the expense account called Repairs and Maintenance expense. Emily's actions violated which of the following?

Question

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Emily's actions violated the reporting entity concept, which requires that the financial statements only include transactions related to the business entity and not personal transactions of the owner. Using a company credit card to pay for personal expenses, such as a day at the spa, is a violation of this concept. The going concern assumption, monetary unit concept, and historical cost measurement method are not relevant to this situation.

Emily Hogan Recently Opened a New Business