The Business Entity Principle

question 110

Multiple Choice

The business entity principle

• A)Means that business records should be kept separate from the owner's personal records.
• B)Requires that corporations have shareholders.
• C)Requires that sole proprietors have unlimited liability.
• D)Requires that partnership income be taxed at the partnership level.
• E)Requires that partnerships have written agreements.

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Definitions:

Issuance

The process of distributing new or existing securities for sale to investors.

Journal Entry

A record in accounting that notes the details of a financial transaction in terms of debits and credits to the accounts.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price when the bond is sold for less than its face value.

Bonds Payable

Long-term liabilities represented by promissory notes issued by a company to raise capital, to be repaid at a future date.