Question

Osbon Ho for using cash from the bu s Since the corporation pad for the car was Stuart Alien Corporation manufactures computer hardware. The president of the corporation bought a new car as a gift for his daughter and recorded in its books as an asset. Which of the following concepts or principles of accounting did the corporation ? O A monetary unit assumption OB economic assumption OC going conce p tion D D cost principe

Answer 1

Answers

• Answer #1

>Correct Answer = Option ‘B’ Economic Entity Assumption has been violated.
>This is because as per Economic entity assumption, transactions of the business entity and its owner must be separated.
>Car purchased for daughter is the personal transaction of the owner that should not have led to the accounting of car in the books.

• Answer #2

>Correct Answer = Option ‘B’ Equity = $ 140,000

Assets = Liabilities + Equity
150000 = 10000 + Equity
150000 – 10000 = Equity
140000 = Equity