The financial statements that are prepared for the business are separate and distinct from the owners according to the
A) going-concern assumption.
B) matching principle.
C) economic entity assumption.
D) full disclosure principle.

Question

Quizplus · Accepted Answer

The economic entity assumption states that the financial statements of a business should be separate and distinct from the personal financial statements of its owners. This means that the business's financial statements should not include any personal expenses or assets of the owner, and vice versa. The going-concern assumption refers to the idea that the business will continue to operate in the future, while the matching principle requires expenses to be matched with the revenues they helped generate. The full disclosure principle requires a company to provide all relevant information that would impact someone's decision to invest in the company, but it does not affect the separation of the business and owner's financial statements.

The Financial Statements That Are Prepared for the Business Are