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:

Property Taxes

Taxes levied by local governments based on the value of property owned, such as land and buildings.

Compound Annual Rate

The rate of return that would be required for an investment to grow from its beginning balance to its ending one, compounding over a period of a year.

Compounded Annually

Describes the calculation of interest on an investment whereby the interest earned each year is added to the principal sum, leading to interest being earned on interest from the subsequent year onwards.

Monthly Compounded

Calculation of interest on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan, compounded every month.