According to the business entity concept,a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

Question

Quizplus · Accepted Answer

The business entity concept requires that a clear distinction be made between the personal affairs of the owner and the transactions of the business entity. Therefore, nonbusiness assets and liabilities should not be included in the accounting records of the business entity.

According to the Business Entity Concept,a Proprietor May Include Nonbusiness