Bob Bertolucci,owner of Bob's Bazaar,also owns a personal residence that costs $575,000.The market value of his residence is $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 principle is most relevant because it dictates that the personal financial information of the owner should be kept separate from the business's financial information. Therefore, Bob's personal residence, regardless of its cost or market value, should not be included in the financial statements of Bob's Bazaar.

Bob Bertolucci,owner of Bob's Bazaar,also Owns a Personal Residence That