Separating business from owner and ensuring balanced entries

Steps:

• Recognize the transaction as owner's $1000 capital contribution to the business.
• Apply business entity principle by treating the business as distinct from the owner, recording the payment as capital introduced.
• Apply duality principle by using double-entry bookkeeping: debit bank (asset increase) and credit capital (equity increase).
• Confirm the entry balances the accounting equation (Assets = Liabilities + Equity).

Why A is correct:

• Business entity separates personal and business affairs, crediting capital for owner's investment; duality requires every debit (bank) to have an equal credit (capital), maintaining equation balance.

Why the others are wrong:

• B: Going concern assumes ongoing operations but does not explain separating owner from business or the debit-credit entry.
• C: Matching allocates expenses to revenue periods, irrelevant to initial capital recording.
• D: Matching is not applied; duality fits but lacks business entity separation.

Final answer: A