Which of the following distinguishes the personal transactions of business owners from business transactions?
A) Unit-of-measure assumption
B) Full-disclosure principle
C) Materiality constraint
D) Separate entity assumption

Question

Quizplus · Accepted Answer

The separate entity assumption distinguishes the personal transactions of business owners from business transactions by treating them as separate entities. This means that the financial transactions of the business are recorded separately from the personal transactions of the owner(s). This assumption is key to the concept of maintaining proper books and records for the business, and it helps ensure that financial statements accurately reflect the performance and financial position of the business itself. The other options listed (unit-of-measure assumption, full-disclosure principle, and materiality constraint) are accounting principles that apply to both personal and business transactions.

Which of the Following Distinguishes the Personal Transactions of Business