The Economic Entity Assumption Requires That the Activities

question 86

Multiple Choice

The economic entity assumption requires that the activities

• 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 an entity be kept separate from the activities of its owner.

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Definitions:

Secured Party

A creditor or lender that has an interest, typically in the form of a lien, in the collateral offered by the debtor to secure a loan or obligation.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower defaults.

Proceeds

The total amount of money or assets that result from a particular transaction or event.

Consideration

Something of value that is given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.