The reason owners' assets and business assets must be accounted for separately is because:
A) They are different legal entities
B) They are treated differently for tax purposes
C) Enterprises are always set up as limited companies
D) To do so conforms with the business entity principle

Question

Quizplus · Accepted Answer

The separation of owners' assets and business assets is required by the business entity principle, which requires that business transactions be kept separate from personal transactions. This principle ensures that the financial position of the business is accurately reflected in the financial statements, and helps to prevent fraud and errors in accounting. While the other options listed may also be true to some extent, they do not fully explain why owners' assets and business assets must be accounted for separately.

The Reason Owners' Assets and Business Assets Must Be Accounted