Asked by Stefanie Olivan on Jul 18, 2024
Verified
The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities.
Economic Entity Assumption
An accounting principle that treats a company as a separate entity from its owners for financial reporting purposes.
- Achieve insight into the fundamental concepts guiding financial reporting.
Verified Answer
MF
Madison FearsJul 22, 2024
Final Answer :
True
Explanation :
The economic entity assumption is a fundamental accounting principle that requires entities to be treated as separate economic units, which means that transactions, assets, liabilities, and expenses are recorded separately for each entity, and the personal finances of the owner are not mixed up with the business's finances. This principle helps ensure accurate accounting records and financial statement reporting.
Learning Objectives
- Achieve insight into the fundamental concepts guiding financial reporting.
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