Dual aspect term in Accounting ?

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What is dual aspect accounting?

The dual aspect concept states that every business transaction requires recordation in two different accounts.

This concept is the basis of double entry accounting, which is required by all accounting frameworks in order to produce reliable financial statements.

What is the significance of dual aspect concept?

Dual Aspect Concept, also known as Duality Principle, is a fundamental convention of accounting that necessitates the recognition

all aspects of an accounting transaction. Dual aspect concept is the underlying basis for double entry accounting system.

Dual aspect concept

Assets = Liabilities + Equity

Issue an invoice to a customer. One part of the entry increases sales, which appears in the income statement, while the offset to the entry increases the accounts receivable asset in the balance sheet.

In addition, the change in income triggered by the increase in sales appears in retained earnings, which is part of the equity section of the balance sheet.

Receive an invoice from a supplier.

One part of the entry increases an expense or an asset account, which can appear in either the income statement (for an expense) or in the balance sheet

The offset to the entry increases the accounts payable liability in the balance sheet. In addition, the change in income triggered by the recordation of an expense appears in retained earnings, which is part of the equity section of the balance sheet.

If an organization were not to observe the dual aspect concept, it would use single-entry accounting, which is essentially a checkbook. A checkbook cannot be used to derive a balance sheet, so an entity would be limited to the construction of a cash-basis income statement.

What is the significance of dual aspect concept?

What does the dual effect of transactions mean?

The dual effect principle is the foundation or basic principle of accounting. It provides the very basis for recording business transactions

into the records of a business. This concept states that every transaction has a dual or double effect and should therefore be recorded in two places.

What are the different types of accounting concepts?

The various accounting concepts are as follows:

Entity Concept: ...

Going Business Concept (Continuity of Activity): ...

Money measurement concept: ...

Cost Concept (Objectivity Concept): ...