Question

An accounting concept that limits the economic data in the accounting system of a specific business or entity to data related directly to the activities of that business or entity is referred to as:________-

Answer 1

Answer:

Business entity concept

Explanation:

The business entity concept states that there must be a separation of records between the business transactions directly associated to a specific business or entity and the transactions directly associated to the owners of the business or other business.

The advantage of this concept is that it prevents intermingling of records of multiple businesses, and therefore makes it easy to separately audit the financial records and determine taxable incomes of each entity.