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Question
According to Business Entity Concept:
Options
Distinction should be made between fixed assets and current assets.
Distinction should be made between business transactions and personal transactions.
Distinction should be made between Capital expenditure and revenue expenditure.
Accounting equation is always true.
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Solution
Distinction should be made between business transactions and personal transactions.
Explanation:
The Business Entity Concept states that a business is treated as a separate legal entity from its owners. This means that there should be a clear distinction between the business's financial transactions and the personal financial transactions of its owners. The financial records of the business should only include business transactions, ensuring that the financial statements accurately reflect the business's financial position.
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