Question

An apartment on the Sunshine Coast belongs to Mark, the owner of Smart Travel Goods Pty Ltd. Because he thinks he might allow executives to use it sometimes, Mark decides to list the apartment as an asset of the company. Which of the following principles affects this decision?

Select one:

a. Full disclosure

b. Monetary principle

c. Going concern principle

d. Accounting entity principle

e. Cost principle

Answer 1

Answer: d. Accounting entity principle

Explanation:

As per 'Accounting entity principle',

For the purpose of recording financial information the business unit or entity is distinct from the person(s) who own it. and personal asset or obligations should not be incorporated into the business as well as assets or obligations of the business unit or entity should not be incorporated into the individual.

Therefore,  Accounting entity principle affect if Mark decided to list the apartment (personal property) as an asset of the company.

Thus, Option d is correct and remaining options are incorrect.