The owner of a dry cleaning business maintains separate checkbooks for his business and his personal affairs.This best describes an application of the:

Question

Quizplus · Accepted Answer

The business entity concept requires that financial transactions should be recorded separately for each separate entity or business. In this case, the dry cleaning business is treated as a separate entity from the personal affairs of the business owner, and therefore, separate checkbooks are maintained for each entity. This helps to ensure that the financial records of the business are accurate and reliable, and that financial transactions are not mixed up with personal transactions. This also enables the business owner to assess the financial performance of the business separately from his personal finances.

The Owner of a Dry Cleaning Business Maintains Separate Checkbooks