The Accounting Convention That Requires the Activities of the Business

question 24

Multiple Choice

The accounting convention that requires the activities of the business to be kept separate from the activities of the owner is the:

• A) accounting period convention.
• B) conservatism convention.
• C) dual aspect convention.
• D) business entity convention.

---

Definitions:

Equity Instruments

Financial securities that represent ownership interest in a company, such as stocks.

Business Combination

An occurrence or action where a buyer obtains dominance over one or several companies.

Entry Price

Refers to the initial cost at which an asset, security, or investment is purchased, marking the basis for future financial analysis.

Equity Instrument

A financial instrument indicating ownership in an entity, such as common stock or preferred shares, that represents a claim on the entity's residual assets after liabilities have been deducted.