Bob Bertolucci, owner of Bob's Bazaar, also owns a personal residence that cost $575,000, but has a market value of $725,000. During preparation of the financial statements for Bob's Bazaar, the accounting principle most relevant to the presentation of Bob's home is:
A) The concept of the business entity.
B) The cost principle.
C) The going-concern assumption.
D) The objectivity principle.

Question

Quizplus · Accepted Answer

The concept of the business entity is relevant because it dictates that Bob's personal assets, like his home, should not be included in the financial statements of his business, Bob's Bazaar.

Bob Bertolucci, Owner of Bob's Bazaar, Also Owns a Personal