Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of
A)following the going concern assumption.
B)applying the conservatism constraint.
C)following the separate entity assumption.
D)applying the realization principle.

Question

Quizplus · Accepted Answer

The separate entity assumption is the idea that business transactions should be kept separate from the personal transactions of the owner. This means that in the eyes of the law and accounting, the business is its own separate entity, distinct from the owner. This helps to protect the personal assets of the owner from being used to pay for the debts or liabilities of the business.

Keeping the Personal Assets of the Owner of a Business