Assertion (A): Capital is treated as an internal liability of the business. Reason (R): The business and its owner are considered distinct entities under the Business Entity Concept. MCQ with Answer and Explanation
Assertion (A): Capital is treated as an internal liability of the business. Reason (R): The business and its owner are considered distinct entities under the Business Entity Concept.
A. Both A and R are true and R is the correct explanation of A
B. A is false but R is true
C. A is true but R is false
D. Both A and R are true but R is not the correct explanation of A
Answer: Option A
Solution (By JKSSB Mock Tests)
The Business Entity Concept treats the owner as a separate entity from the business, making the capital invested by the owner an internal liability.
Explanation:
Preliminary expenses are a fictitious asset because they are not realizable and have to be written off. Goodwill, trademark, patent are intangible assets.
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