DUAL ASPECT CONCEPT OF ACCOUNTING

ALL ABOUT ACCOUNTING :- 23rd BLOG

  ☆☆☆ACCOUNTING☆☆☆

Hi freinds., 🙏

Today's discuss 6th concept of accounting....

                                             So let's discuss ..... 

   ★ DUAL ASPECT CONCEPT :-

Dual aspect is the foundation or basic principle of accounting. It provides the very basis of recording business transactions in the books📚 accounts. This concept assumes that every transaction has a dual effect, I.e. it affects two accounts in their respective opposite sides. Therefore, the transaction should be recorded at two places. It means, both the aspects of the transaction must be recorded 🔘 in the books of accounts. 

                 Thus the duality concept is commonly expressed in terms of fundamental accounting equation 👉

               [Assets = Liabilities + capital] 

The above accounting equation states that the assets of a business are always equal to the claims 🛄 of owner/owners and the outsiders. This claim is also termed as capital or owners equity and that of outsiders, as liabilities or creditors' equity. 

The knowledge of dual aspect helps in identifying the two aspects of a transaction which helps in applying the rules of recording the transactions in books of accounts. The implication of dual aspect concept is that every transaction has an equal impact on assets and liabilities in such a way that total assets are always equal to total liabilities. 

🌬️Let us analyse some more business transactions in terms of their dual aspect :

1. Capital brought in by the owner of the business 

the two aspects in this transaction:

(1)  increased a cash or bank balance. 

(2) increased 📈 a capital. 

2. Getting a secured loan from a bank

the two aspects in this transaction:

(1) increase a bank balance. 

(2) increase 📈 a liabilities. 

3. Purchase a plant and machinery 

the two aspects in this transaction:

(1) Reduction in cash 🤑 or bank balance🏦 

(2) owning of plant and machinery. 

4. Goods purchased on credit 💳 

the two aspects in this transaction:

(1) increase 📈 a stock in trade. 

(2) increase 📈 a liabilities. 

(5) Shop rent paid by cash or digital payment 

the two aspects in this transactidecrease. 

(1) Cash or bank balance will decrease 📉.

(2) Rent (expenses incurred).

Ones 🔂 the two aspects of a transaction are known it becomes easy 😌 to apply the rules of accounting and maintain the books 📚 of accounts properly. 

                   The interpretation of the dual aspect concept is that every transaction has an equal effect on assets and liabilities in such a way that total assets are always equal to total 😨 liabilities of the business. 

 * Importance of dual aspect concept in

 accounting :- 

• This concept helps accountant in detecting error. 
• It encourages the accountant to post each entry in opposite sides of two 2️⃣ affected accounts. 

★Remaining 3 concepts discuss in 24th blog....★ 
                                      
                                          So wait my 24th blog....★

     

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