The Separate Entity Assumption Means

question 218

Multiple Choice

The separate entity assumption means:

• A)a company's financial statements reflect only the business activities of that company.
• B)each separate owner's finances must be revealed in the financial statements.
• C)each separate entity that has a claim on a company's assets must be shown in the financial statements.
• D)if the business is a sole proprietorship,the owners' personal activities are included in the company's financial statements.

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Definitions:

Required Rate Of Return

The minimum annual percentage return an investor expects to achieve from an investment, considering the risk involved.

Net Operating Income

A financial metric indicating the income generated from a company's core business operations, excluding deductions of taxes and interest.

Turnover

The rate at which inventory or assets are sold and replaced over a certain period of time, indicating the efficiency of sales or the usage of assets.

Investment Opportunity

A potential venture or project that promises returns or profits to the investor.