ENTITY ASSUMPTION Definition

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ENTITY ASSUMPTION is the assumption that financial statements are prepared for an entity that is separate and distinct from its owners.

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SOLE PROPRIETOR is an individual who owns a business as opposed to stock in a corporation. A sole proprietor pays no corporate income tax but has unlimited liability for his/her business debts and obligations. See SOLE PROPRIERTORSHIP.

PURE COST is any direct readily verifiable cost assignable to the subject or item, e.g., the direct cost of producing a product.

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