The assumption that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner is the:
A)Monetary unit assumption.
B)Economic entity assumption.
C)Going concern assumption.
D)Periodicity assumption.

Question

Quizplus · Accepted Answer

The economic entity assumption states that the activities of the business must be kept separate from the activities of the owner. This means that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner. Therefore, option B is the correct answer. The monetary unit assumption refers to the fact that financial transactions are recorded in a common currency. The going concern assumption assumes that the company will continue to operate in the future, and the periodicity assumption means that financial statements should be prepared at regular intervals.

The Assumption That the Assets and Liabilities of the Business