Don is the owner of two businesses; Company A and Company B. Don's accountant informed Don...
Don is the owner of two businesses; Company A and Company B. Don's accountant informed Don not to co-mingle the funds of the two businesses with one another. This would be following the
| A. |
Business entity assumption |
|
| B. |
separate ownership assumption |
|
| C. |
going-concern assumption |
|
| D. |
the monetary unit assumption |
Homework Answers
answer is A. Business entity assumption
reason : business entity assumption states that financial records of a business must be kept separate from any other business or those of its owners . So, Don should keep the financial records of his 2 companies seperate from each other according to this assumption.
Seperate ownership assumption treats a business separately from its owner.
Going concern assumption states that the company will continue to operate to the anticipated future and has no intention to close its operations.
The monetary unit assumption states that only the transactions that can be measured and expressed in monetary terms should be recorded in the books of accounts .
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