Sam Jones owns a local restaurant. He buys steaks from the restaurant to serve his family at home for dinner. Sam should record this sale in the restaurant's books because of the
A) business entity principle.
B) going-concern concept.
C) cost principle.
D) materiality principle.

Question

Quizplus · Accepted Answer

The business entity principle requires that the finances of the owner and the business be kept separate. Since Sam Jones is the owner of the restaurant who is buying steaks for personal use, this transaction needs to be recorded in the restaurant's books to differentiate between personal and business finances.

Sam Jones Owns a Local Restaurant