When we view the business entity in the context of accounting, as well as in its legal form, it is clear that:
A)the entity is separate from its owners.
B)the entity is identical to its owners.
C)the pooling method should be used for business combinations.
D)entities should be considered as one unit as a result of one controlling the other(s).

Question

Quizplus · Accepted Answer

In the context of accounting and legal form, the business entity is viewed as separate from its owners. This means that the assets, liabilities, and transactions of the business are distinct from those of the owners. This concept is known as the "separate entity concept" and is fundamental to accounting and business law. Choice B is incorrect because the entity is not identical to its owners. Choice C is not relevant to the given context. Choice D is incorrect because entities should not be considered as one unit if they are separate entities.

When We View the Business Entity in the Context of Accounting