The Reason Owners' Assets and Business Assets Must Be Accounted

question 13

Multiple Choice

The reason owners' assets and business assets must be accounted for separately is because:

• A) They are different legal entities
• B) They are treated differently for tax purposes
• C) Enterprises are always set up as limited companies
• D) To do so conforms with the business entity principle

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not intended to be sold within a year, such as buildings, machinery, and equipment.

Equity Capital

The amount of money that is invested into a business by its owners in exchange for a share of ownership.

Dividend Payments

Distribution of a portion of a company's earnings to its shareholders, usually in cash or additional stock.