The Economic Entity Assumption States That Economic Events

question 232

Multiple Choice

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 IASB.
• 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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Definitions:

Due Care

The level of judgment, attention, and diligence reasonably expected from, and ordinarily exercised by, a person under a particular circumstance.

Efficiency Wages

Efficiency wages refer to the concept where employers pay higher than the market-clearing wage to increase productivity, reduce turnover, and encourage loyalty among employees.

Labor Force Turnover

The rate at which employees leave a company and are replaced by new employees.

Labor Productivity

Average product of labor for an entire industry or for the economy as a whole.