Assertion (A) Personal transactions of the owners of the business are not recorded in the books.
Reason (R) According to the business entity concept, each business enterprise is considered as an accounting unit separate from owners.

Solution (By Examveda Team)

The correct answer is Option A: Both (A) and (R) are correct and (R) is the correct explanation of (A).

Let's break down why:

Assertion (A): Personal transactions of the owners of the business are not recorded in the books.
This means that if the owner buys groceries for their family, or pays their personal rent, the business doesn't record these transactions.
This statement is TRUE.

Reason (R): According to the business entity concept, each business enterprise is considered as an accounting unit separate from owners.
This means that the business is treated as a separate 'person' from its owner for accounting purposes.
So, the business has its own bank account, its own assets, and its own liabilities, which are distinct from the owner's.
This statement is also TRUE.

Why is (R) the correct explanation of (A)?
The reason why we *don't* record the owner's personal transactions in the business books is *because* of the business entity concept.
Because the business is a separate entity, only *business* transactions are recorded.
The owner's personal transactions are *not* business transactions.

Therefore, both the assertion and the reason are correct, and the reason correctly explains the assertion.