What is Dual Aspect Concept in Accounting?

The dual aspect concept indicates that each transaction made by a business needs to be recorded in two separate accounts. These accounts form a basis of double-entry accounting and other financial accounting which is used to generate reliable financial statements

The accounting equation used in this concept is.

Assets = Liabilities + Equity

The accounting equation is registered in the balance sheet, where the assets total amount should be equal to liabilities and equity of the firm. Dual aspect concept is also described as the duality principle. 

This concept explains that if something is given, someone will receive it. This can be explained as whenever a transaction occurs there is a two-sided effect, one is credit and the other is debit for a similar amount. 

Do you know the difference between assets and liabilities?

Dual Aspect Concept Example

A firm was started by Ms Priya with cash ₹1,00,000.  The following will be the effects on the accounting equation.

Assets = Liabilities Owner’s equity
Cash + = Capital
1,00,000 10,000

However, if Ms Priya buys goods in credit from Ms Sangya at ₹10,000 then the current status of the accounting equation will be:

Assets = Liabilities Owner’s equity
Cash  + Purchases           = Creditors                           + Capital
1,00,000                            = 10,000
1,00,000  + 10,000           = 10,000                              + 1,00,000

Additional Reading: List of Current Assets

So each transaction will impact the accounting equation. However, it is important to remember that both sides of the equation should be equal.

The above mentioned explains in detail the dual aspect concept in accounting concepts with examples. To know more, stay tuned to BYJU’S.