Question 29
Accounting Concepts and ConventionsWithdrawal of cash D 10,000 by a sole proprietor from his business for personal use is treated in the books as a deduction from his capital. The concept applied is
- A.going concern concept
- B.entity concept
- C.historical cost concept
- D.consistency concept
Show the answer and explanation
Answer: B (entity concept)
Explanation
Because the business is separate from the owner, money he takes for himself is drawings that reduce his capital.