The separate economic entity assumption assumes that:
A) financial events are meaningful only when they can be expressed in economic terms.
B) the business will continue to operate indefinitely.
C) the financial statements of a business reflect the affairs of the business-not the affairs of the owners.
D) a business's life can be separated into time periods with income being reported within one economic time period.

Question

Quizplus · Accepted Answer

The separate economic entity assumption assumes that the financial statements of a business reflect the affairs of the business, not the affairs of the owners. This means that a business is viewed as a separate entity from its owners or shareholders, and its financial statements are prepared on that basis. It assumes that the business will continue to operate indefinitely, and that the business's life can be separated into time periods with income being reported within one economic time period.

The Separate Economic Entity Assumption Assumes That