The Basis Upon Which the Personal Assets of the Owner

question 43

Multiple Choice

The basis upon which the personal assets of the owner are excluded from the business's balance sheet is referred to as which assumption?

• A) Materiality
• B) Accounting entity
• C) Accrual basis
• D) Going concern

---

Definitions:

Revenue Recognition

This is an accounting principle that dictates the specific conditions under which income becomes recognized as revenue.

Indirect Costs

Expenses not directly tied to a specific project, product, or service but necessary for the general operation of an organization, such as utilities, rent, and administrative salaries.

Direct Costs

Expenses that can be directly linked to the production of specific goods or services, like materials and labor.

Completed-Contract

Completed-contract method is an accounting technique used to recognize the revenues and expenses of long-term projects only upon their completion.