The accounting concept that requires every business to be accounted for separately

7.The accounting concept that requires every business to be accounted for separatelyfrom other business entities, including its owner or owners is known as the:a.Time-period assumption.b.Business entity assumption.c.Going-concern assumption.d.Revenue recognition principle.e.Measurement (Cost) principle.

8.The rule that requires financial statements to reflect the assumption that thebusiness will continue operating instead of being closed or sold, unless evidenceshows that it will not continue, is the:

9.The accounting principle that requires accounting information to be based on actualcost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

10. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allowsthe inflow of assets associated with revenue to be in a form other than cash, and (3)measures the amount of revenue as the cash plus the cash equivalent value of anynoncash assets received from customers in exchange for goods or services, is calledthe:

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11. Marsha Bogswell is the owner of Bogswell Legal Services. Which accountingprinciple requires Marsha to keep her personal financial information separate fromthe financial information of Bogswell Legal Services?a.Monetary unit assumption.b.Going-concern assumption.c.Measurement (Cost) principle.d.Business entity assumption.e.Expense recognition (Matching) principle.

What is the Business Entity Concept?

The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. Doing so requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner. Without this concept, the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of a single business. Here are several examples of the business entity concept:

• A business issues a $1,000 distribution to its sole shareholder. This is a reduction in equity in the records of the business, and $1,000 of taxable income to the shareholder.

• The owner of a company personally acquires an office building, and rents space in it to his company at $5,000 per month. This rent expenditure is a valid expense to the company, and is taxable income to the owner.

• The owner of a business loans $100,000 to his company. This is recorded by the company as a liability, and by the owner as a loan receivable.

There are many types of business entities, such as sole proprietorships, partnerships, corporations, and government entities.

Reasons for the Business Entity Concept

There are a number of reasons for the business entity concept, including the need to separately track taxes, financial performance, and financial position for each entity. It is also useful for when an organization is liquidated, to determine the amounts of payouts to the various owners. Further, the business entity concept is needed from a liability perspective, to ascertain the assets available in the event of a legal judgment against a business entity. And finally, it is not possible to audit the records of a business if the records have been combined with those of other entities and/or individuals.

What is the accounting concept that requires every business to be accounted for separately from other business entities?

What principle that requires every business to be accounted for?

Which accounting principle states that companies and owners should be treated as separate entities?

What is the meaning of revenue recognition concept?