The Accounting Convention That Requires the Activities of the Business

question 43

Multiple Choice

The accounting convention that requires the activities of the business to be kept separate from the activities of the owner is the:

• A)dual aspect convention.
• B)business entity convention.
• C)conservatism convention.
• D)accounting period convention.

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Definitions:

Inventory Shrinkage

The loss of inventory that can occur from theft, damage, or administrative errors.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Single-Step Income Statement

A simplified income statement that calculates net income by subtracting expenses from revenues in one step.

Statement of Owner's Equity

A financial statement detailing changes in the equity of a company's owner(s) over time, including contributions, withdrawals, and the impacts of net income or loss.