Accounting Multiple Choice Question – 8 May 2019

The entity concept means that…?

Select ONE answer:

1. because a firm is separate and distinct from its owners, those owners cannot have access to its assets unless the firm ceases to trade.
2. accounts must be prepared for every firm.
3. the financial affairs of a firm and its owner(s) are always kept separate for the purpose of preparing accounts.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3

1. A sole trader has access to the assets of his business. He can withdraw cash, stock, etc. These withdrawals are shown in his accounts as drawings.
2. Although it is true that accounts have to be prepared for every firm — for example. for tax purposes, this 1’s not because of the entity concept.
3. Correct
4. Not correct.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor View all posts by stuart001uk2014