Question

The economic entity assumption states that economic events A of different entities can be combined if...

The economic entity assumption states that economic events

A of different entities can be combined if all the entities are corporations.

B must be reported to the Securities and Exchange Commission.

C of a sole proprietorship cannot be distinguished from the personal economic events of its owners.

D of every entity can be separately identified and accounted for.

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Answer #1

The correct option is D. The economic entity assumption states that economic events of every entity can be separately identified and accounted for.

The economic entry assumption is one of the basic assumptions in accounting which states that the economic affairs of an entity are separate and distinct from the economic affairs of associated persons includng owners. So, the capital contributed by owner in his business is listed as a liability for the business.

This way, the economic entity assumption states that a business is an economic entity independent of its owners.

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