According to the Entity Concept

question 7

Multiple Choice

According to the entity concept
I.each unit must keep separate records.
II.each unit reports the results of operations separate and apart from owners.
III.every unit is liable for tax on its income.
IV.each unit is classified as one of two basic entity types.
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• A)Statements I and II are correct.
• B)Statements II and III are correct.
• C)Only statement IV is correct.
• D)Statements I, III, and IV are correct.
• E)Statements I, II, and IV are correct.

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Definitions:

Credit Account

is a financial arrangement where a borrower receives something of value now and agrees to repay the lender at a later date, often with interest.

Small Business Owner

A proprietor of a business enterprise that typically has a limited number of employees and a relatively low volume of sales.

Trade Credit

A financial arrangement where a buyer can purchase goods on account, paying the supplier at a later date, often used to improve cash flow.

New Businesses

Entities that have been recently established and are in the early stages of their operational and financial life cycle, facing unique challenges such as market entry and funding.