Question

Jim marley is the sole owner of marley's appliances. jim borrowed $100,000 to buy a new home to be sued as his personal residence. the liability was not recorded in the records of marley's appliances

Answer 1

Answer:

Economic entity

Explanation:

Economic entity is the principle of accounting, which states that the finances of the business entity should be kept separate from those of the shareholders, owner, partners or the related businesses.

This principle of accounting is considered to be one of the core, fundamental accounting principles.

So, Jim is the owner of the marley appliances and he borrowed $100,000 for buying the home. Therefore, it will not be recorded as the liability because the money borrowed for personal use and as per economic entity concept, the finances of business entity is separate from those of owner.