The separate entity assumption permits businesses to record property and equipment as assets that will provide benefits in future periods.

Question

Quizplus · Accepted Answer

The separate entity assumption is the accounting principle that the business transactions are separate from the transactions of the owners. It does not directly relate to the recording of property and equipment as assets; that concept is more closely related to the economic entity assumption and the matching and historical cost principles.

The Separate Entity Assumption Permits Businesses to Record Property and Equipment