A Basic Assumption of Accounting That Requires Activities of an Entity

question 3

Multiple Choice

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the

• A) stand alone concept.
• B) monetary unit assumption.
• C) corporate form of ownership.
• D) economic entity assumption.

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Definitions:

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit which leads to price taking behavior.

Barriers To Entry

Elements that obstruct or impede the ability of businesses to penetrate a particular market or sector.

Elasticity Coefficient

The elasticity coefficient measures how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price, income, or the price of related goods.

Perfectly Elastic

Describes a market situation where demand or supply can change infinitely with even the slightest change in price.