It is possible that some companies show annual growth while the same trend does not show up in FCF. In this case, I think having cash is a better indicator of the overall financial health of the company. 3) In your own words, a) Explain the economic entity assumption. The premise of the economic entity is to keep the corporate budget separate from the personal one (business owners). b) Why do you think this concept is important for entrepreneurs? I think it is important not to confuse the personal statement with the business statement in order to get accurate figures for both reporting and tax purposes. 4) Newman Production Services began the year with $120,000 in assets and $70,000 in liabilities. Revenue and expenses for the year are $100,000 and $50,000, respectively. The owner made no further contributions during the year, but withdrew $40,000. How much was Newman's net income? (Show your work in calculating the answer and be sure to use the correct punctuation for dollar amounts.) (This question is worth 3 points and an incorrect answer or an initial unanswered answer will result in 0 points being awarded.) Total Revenue – Total Expenses = Net Income $100,000-$50,000 = $50,000 Net Income: