J. Green is the sole owner and manager of the ABC Lawn and Grass Service. Green purchased a new station wagon only for personal use. Green uses a dump truck in the business. Which of the following assumptions, principles, or constraints would be violated if Green recorded the cost of the station wagon as an asset of the business?
A) Materiality constraint
B) Conservatism constraint
C) Continuity assumption
D) Full-disclosure principle
E) Separate entity assumption

Question

Quizplus · Accepted Answer

The separate entity assumption assumes that the business is separate from its owner, and therefore personal assets of the owner should not be recorded as business assets. The station wagon was purchased solely for personal use and therefore should not be recorded as an asset of the business.

J Green Is the Sole Owner and Manager of the ABC