When a partner submits personal living expenses for company reimbursement and the expense is reflected as a reduction of period profits, the company has violated the

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The separate entity assumption requires that a business's financial reports are strictly related to the operations of the business itself, not to the personal financial affairs of its owners or partners. Submitting personal living expenses for company reimbursement and reflecting this as a reduction of period profits violates this principle because it fails to maintain the distinction between the personal transactions of the partners and the business transactions of the company.

When a Partner Submits Personal Living Expenses for Company Reimbursement