Question

The economic entity assumption states that economic events

A) of different entities can be combined if all the entities are corporations

B) must be reported to the Securities and Exchange Commission

C) of a sole proprietorship cannot be distinguished from the personal economic events of its owners

D) of every entity can be separately identified and accounted for

Answer 1

The economic entity assumption states that economic events of every entity can be separately identified and accounted for.

Step-by-step explanation:

The economic entity assumption states that economic events of every entity can be separately identified and accounted for. This means that the financial transactions of a business entity are recorded and reported separately from the personal financial transactions of its owners or any other entities.

For example, if a sole proprietorship owns a car, the car is considered a separate economic entity from the owner's personal car.