Assertion (A): Partnership is a separate and distinct entity from partners from the viewpoint of accounting.
Assertion (A): A partnership is a separate and distinct entity from partners from the viewpoint of accounting.
Reason (R): According to the Business Entity Concept, transactions of the business are recorded from the viewpoint of the firm. Hence, it is a separate and distinct entity from partners from the viewpoint of accounting.
in the context of the above two statements, which of the following is correct?
a) Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
c) Assertion (A) is correct but the Reason (R) is not correct.
d) Both Assertion (A) and Reason (R) are not correct.
Anurag Pathak Changed status to publish April 15, 2023
Ans – b)
As per Business Entity Concept, the partnership firm is a separate entity from partners from the viewpoint of accounting. Thus all business transactions are recorded from the business point of view.
For example when capital is introduced into the business by partners. The cash is incoming for the business and outgoing for the partners.
Such cash is recorded as incoming from the business point of view in the books of accounts.
Thus Partners and Partnership Firms are separate entities from a business point of view.
Anurag Pathak Changed status to publish April 4, 2023
