12. Which of the following accounting concepts requires that business records be kept separate

from the owners personal records?

a Matching

b. Business entity

c. Cost

d. Revenue recognition

b. Business entity

Explanation:

The business entity concept asserts that the transactions of any form of a business ownership must be in separate records from those of its owners. A business should only record activities that relate to business transactions.

The sole proprietorship is the simplest type of business ownership. Its owner must keep a separate record for his or her expenses, and another one for the business. A mix up of transaction will make the accounting information loses its credibility and usability. In other words, the business report will not reflect the actual performance of the business.