The owner of a company included his personal travel expenses in the company's income statements. Indicate the accounting principle that is violated.

Cost principle

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Going concern concept

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Entity concept

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Conservatism

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Solution

The correct option is B Entity concept
The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. Doing so requires the use of separate accounting records for the organisation that completely exclude the assets and liabilities of any other entity or the owner. Without this concept, the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of single business.

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