Question

A sole proprietor decided to use the same bank account for his personal affairs as for his business. Which of the following accounting principles is violated?

• A. Going concern
• B. Entity
• C. Measuring unit
• D. Objectivity

Answer 1

The correct option is B Entity

Here, Business Entity Concept states that the business is separate from its owner and the amount which the businessman has invested into the business is termed as capital and Such capital is a liability for the business.
When the owner withdraws some money from the business it is known drawings.
Therefore, both business and sole proprietor need to have separate accounts so, the Entity concept is violated when a sole proprietor decided to use the same bank account for his personal affairs as for his business..