All of the Following Are True Statements About the Entity

question 92

Multiple Choice

All of the following are true statements about the entity assumption EXCEPT for:

• A)the entity assumption draws a sharp boundary around each entity.
• B)the transactions of the business cannot be combined with the transactions of the owner.
• C)the entity assumption ensures that the business will continue indefinitely.
• D)under the entity assumption,the entity is any organization that stands apart as a separate economic unit.

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Definitions:

Departmental Operating Margin

A measure of the profitability of individual departments within a business, calculated as the difference between departmental revenue and expenses.

Operating Expenses

Costs incurred in the normal operation of a business, excluding the cost of goods sold.

Direct Expenses

Expenses that can be traced directly to a specific department.

Specific Department

A designated segment within an organization focused on a particular area of activity or operations.