Dual Aspect Concept

Dual Aspect Concept

Dual Aspect Concept is the core of the double-entry bookkeeping. It provides the very basis of recording business transactions in the books of accounts. Dual Aspect Concept assumes that every transaction has two-sided effects, 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. For example, an asset purchased for cash has two aspects which are

(I) Giving of cash

(ii) Receiving of goods

The concept of duality 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 owner’s equity and that of outsiders, as liabilities or creditors’ equity. According to this concept for every debit, there is a correspondence credit and vice versa. Every transaction has two aspects. These two aspects may be:

  1. An increase in asset and decrease in other assets
  2. An increase in asset and simultaneously increase in liability
  3. A decrease in asset and increase in another asset
  4. A decrease in asset and decrease in liability

Similarly, there may be:

  1. Decreases in one liability, decrease in other liability
  2. Increase in one liability increases in another asset
  3. Decrease in liability increases in other liability
  4. Decrease in liability and decrease in an asset

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