The separate entity assumption has more validity for a larger corporation than it would for a sole proprietorship.

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Quizplus · Accepted Answer

The separate entity assumption assumes that the business is distinct from its owners and other entities, and has its own accounting records. This assumption is easier to apply in the case of a larger corporation, which has a greater degree of legal and financial separation from its owners, than in the case of a sole proprietorship, where the business and the owner are often seen as one and the same.

The Separate Entity Assumption Has More Validity for a Larger