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Shaikha Anwar
on Nov 14, 2024

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Sam Ryo is the proprietor (owner) of Sam's a retailer of golf apparel. When recording the financial transactions of Sam's Sam does not record an entry for a car he purchased for personal use. Sam took out a personal loan to pay for the car. What accounting concept guides Sam's behavior in this situation?

A) Pay back concept
B) Economic entity assumption
C) Cash basis concept
D) Monetary unit assumption

Economic Entity Assumption

This accounting principle assumes that a company's financial activities are distinct from those of its owners or other businesses.

Accounting Concept

Fundamental principles or theories that underpin financial accounting practices, such as the matching principle or accrual basis accounting.

Personal Loan

An unsecured loan given to an individual based on their creditworthiness, without requiring collateral, typically used for personal expenses.

  • Understand the concept of economic entity assumption and its impact on accounting procedures.
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Carmen BeaverNov 19, 2024
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