Which of the following statements is incorrect?
A) A balance sheet reports assets, liabilities and equity at a point in time.
B) The exclusion of an asset from the business balance sheet because it is for private use is due to the going concern assumption.
C) The average period between the purchase of merchandise and the conversion of this merchandise back into cash is the operating cycle.
D) In order for a resource to be classified as an asset of the entity, the benefits must accrue to the entity.

Question

Quizplus · Accepted Answer

The exclusion of an asset from the business balance sheet because it is for private use is due to the personal use assumption, not the going concern assumption. The going concern assumption assumes that the entity will continue to operate in the foreseeable future.

Which of the Following Statements Is Incorrect