Are Personal Assets to be Included in the Company’s Balance Sheet?

Company owners do have their fair share of assets. These may be the result of the company’s profitability or acquired before the formation of the business. These assets can be in large quantities or in small ones. Whatever the case may be, questions still arise whether the owners’ personal assets are to be included in the company’s balance sheet or not. Let’s take a look at the economic entity principle. According to the economic entity assumption, the activities of the entity should be kept separate from the activities of its owners and all other economic entities. So these only goes to show that all personal assets of the owners should be excluded in the balance sheet because the business is considered as a separate entity. This is also applicable to sole proprietors.

Leave a Reply

Your email address will not be published. Required fields are marked *