Joshua Thomas Corporation manufactures and retails computer hardware.The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business.Since the corporation paid for the car,it was recorded in its books as an asset.Which of the following concepts or principles of accounting did the corporation violate?
A)monetary unit assumption
B)economic entity assumption
C)cost principle
D)going concern assumption

Question

Quizplus · Accepted Answer

The economic entity assumption requires that the business transactions be kept separate from the personal transactions of its owners or other businesses. By using company funds to purchase a personal item, the president violated this principle.

Joshua Thomas Corporation Manufactures and Retails Computer Hardware