Accounting · Accounting Principles

Which one of the following statements correctly defines the 'business entity concept'?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1For accounting purposes, the business is always treated as separate from its owners.✓
2The financial statements of an entity should contain all personal transactions related to its owners.
3The business must exist only as a sole trader or partnership.
4The business and its owners are always legally separate entities.

Correct answer

For accounting purposes, the business is always treated as separate from its owners.

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